The limited liability company (LLC) entity type provides many advantages—like reducing the owners’ personal liability, and providing flexibility in tax classification and management structure.
Once you’ve established LLC status, you’ll need to comply with ongoing LLC compliance requirements to maintain LLC protections and avoid any penalties against your business. In most states, this includes filing an LLC annual report.
What is an LLC annual report?
An LLC annual report is a brief overview of key facts about a limited liability company (LLC). It typically includes business contact information, contact information for owners (called “members” of the LLC), and a record of any major activities (such as change in ownership, business purpose, or location) during a given reporting period.
States use annual reports to maintain updated information about all businesses transacting in the state. The purpose of the report is to ensure that they are able to contact you (or your registered agent) as needed, e.g, to deliver routine government correspondence or to notify you of a legal action. Some states also use LLC annual report information to determine whether your business owes franchise taxes.
Filing processes, fees, and frequency vary by state. Depending on your state, your LLC annual report might also go by a different name. State-specific names can include the following:
- Annual statement
- Statement of information
- Periodic report
- Biennial statement (due every two years)
- Decennial statement (due every ten years)
What information appears in an LLC annual report?
Although specifics vary by state, most LLC annual reports require the following information:
- Business name
- Business address or principal office address
- A brief statement of business services
- Federal employer identification number (your EIN) and any other state-issued document numbers
- Registered agent name (if applicable)
- Registered office address (if applicable)
- Addresses of offices in the state (if applicable)
- Fictitious name (if applicable)
- The names and addresses of members and managers
Some states will also request financial information, such as liabilities and assets located in the state. If you’re unsure how to satisfy annual report requirements, it helps to speak with a business lawyer in the state where you’re filing. It is safer to double-check and file your report accurately than to make amendments to correct it later.
Do all LLCs need to file an annual report?
As of June 2023, Arizona, Missouri, New Mexico, Ohio, and South Carolina don’t require LLCs to file annual reports. All other states require filling, although in some cases reports are only due every two or ten years.
If you don’t file your LLC annual report on time, the state can impose a fine and your business can lose good standing, preventing you from opening a business bank account, taking out a loan, or registering to do business in another state. Continued non-compliance can also cause the state to dissolve your LLC, resulting in a loss of the liability protections the entity structure provides.
When are LLC annual reports due?
Although LLC annual reports generally contain the same information state to state, due dates vary.
Some states require business owners to file annually, some every other year, and some once a decade. States also determine filing deadlines differently—some require you to file in a certain month, and others base your due date on when you originally registered to do business in the state.
This can make deadlines easy to miss—particularly for multi-state business owners, who have reporting obligations in multiple states. Imagine that you formed your LLC in Delaware in 2019, and over the next two years, you registered to do business in 14 other states. You might end up with eight annual reports due in January, one each in June, July, and August, three due in November, and one due every other December.
Using a tool like Mosey’s compliance platform can help you stay on top of these deadlines. Mosey automates tracking requirements, sends alerts for key tasks, and can even file annual reports for your business.
Here are a few state-specific filing deadline examples.
Iowa Biennial Report
If you are a foreign LLC registered to do business in Iowa, you are required to file a biennial report. You must file your first biennial report between January 1st and April 1st of the first odd-numbered year following the calendar year in which your company was authorized to transact business in Iowa. Subsequent biennial reports must be filed between January 1st and April 1st of each following odd-numbered year.
Michigan Annual Statement
Every LLC must file an Annual Statement by February 15th. However, a foreign LLC authorized to transact business in Michigan after September 30th does not have to file an annual statement in the year immediately after its authorization.
Virginia Registration Fee
As a foreign LLC qualified to do business in Virginia, you must pay an Annual Registration Fee to the State Corporation Commission (SCC) every year. The payment is due on the last day of your foreign qualification anniversary month.
Wyoming Annual Report
To maintain your business, you must file an LLC Annual Report with the Secretary of State every year on the first day of the anniversary month of formation.
What Are the Penalties for Not Filing an LLC Annual Report?
Sole proprietorships and some limited liability partnerships don’t need to file an LLC annual report, which means there’s nothing at stake if they don’t prepare reports. However, most other businesses are required to file a report, and failing to do so may result in substantial penalties.
Alabama and Ohio don’t require businesses to file an annual report, while New York and Indiana only require a report every two years.
Some states charge for filing annual reports. States that charge businesses will add a late fee for reports that aren’t filed on time. Additionally, some states that don’t charge if you’re on time will still charge for late filing. Fees can be flat or a percentage that increases the later a report is filed.
If you don’t file an annual report at all, the consequences are typically tiered. Most states will first eliminate your “good standing” label, meaning your business is recognized as problematic. You won’t be able to grow or expand into other states as a foreign corporation if you haven’t filed your annual report.
At a certain point, the Department of State reserves the right to dissolve your corporation in a process called administrative dissolution. This time limit varies from state to state. Under these circumstances, the state doesn’t need your permission or consent to dissolve a corporation.
After your business has been dissolved, you can no longer conduct business. You may also be unable to reopen your business even after you pay the associated fees and file your report. Reinstatement can be costly and exceedingly difficult — if it is even possible in your state.
What Are Franchise Taxes?
Franchise taxes are generally due at the same time you file your annual report.
Every state and local government reserves the right to require specific taxes. Some states impose franchise taxes, sometimes called privilege taxes, on businesses in certain categories. Currently, Alabama, Arkansas, California, Delaware, Georgia, Illinois, Louisiana, Mississippi, New York, North Carolina, Oklahoma, Tennessee, and Texas use franchise taxes.
Essentially, a franchise tax is charged for conducting business within a state’s borders. Although the name implies this tax applies to franchise businesses, the name is misleading. Franchise tax rules can apply to any standalone business.
Franchise taxes are separate from state and federal income taxes and are calculated differently. The big difference is that franchise tax isn’t calculated based on your business profits. States calculate based on factors like issued shares, net worth, and gross receipts. Other states use a simpler flat fee process.
Depending on your business entity, you may not need to pay franchise taxes. Some types of nonprofit organizations and limited liability corporations are exempt. Exemptions vary according to state laws.
Every state has a different franchise tax filing process and due date. Failure to comply with franchise tax rules can result in hefty financial penalties. States reserve the right to rescind an organization’s ability to conduct business in the state for serious or repetitive violations of franchise tax rules.
How much does it cost to file an LLC annual report?
The cost of filing an LLC annual report varies by state. California and Massachusetts are among the most expensive flat-fee states—California charges $820 for annual filing, and Massachusetts charges $500. The least expensive states include Idaho, Minnesota, Mississippi, and Texas, which don’t charge for filing at all. Colorado, Nebraska, Hawaii, Kentucky, New York, and Utah also all charge filing fees under $20.
In some cases, LLC annual report filing fees can depend on the number of LLC members or other business factors. As an example, Tennessee charges $300 for an LLC with six or fewer members and adds an additional $50 for every additional member, and Alabama assesses a minimum fee of $50 but calculates exact costs based on number of members, business value, and annual income.
How to file an annual report in 5 steps
Follow these steps to file your annual reports and maintain compliance with state laws.
1. Research state requirements
Research due dates, filing processes, annual reporting fees, and reporting requirements in every state in which you are registered to do business. Most states list their annual report requirements on the Department of State’s official website. If you have a business attorney or accountant in the state where you’re filing, they may be able to provide you with thoroughly detailed information about the process.
2. Budget for taxes and fees
LLC annual reporting fees vary widely. Some states also require you to file franchise taxes along with your annual report. Determine what you’ll owe, and make sure that you’ll have enough cash on hand to cover tax and reporting expenses, noting that some states allow payment via credit card for an additional fee.
3. Obtain key forms
Obtain key forms from the Secretary of State. Some states accept online filing for annual reports. States that require hard copies typically make forms available for download or send physical forms to your registered agent. Remember to factor in mailing time if you send a physical copy—filing deadlines are often based on date of receipt rather than postmark.
4. Prepare your report
Assemble the necessary information and prepare to file your report. If your state requires financial information, cross-reference your data with financial statements to ensure accuracy.
5. File your report and plan for the future.
File your report with the Secretary of State and pay all applicable fees. Once you file, it’s also a good idea to double-check the deadlines for your next annual report. If you aren’t using a compliance platform to stay on top of requirements, set a calendar reminder to initiate the process.
Stay Compliant with Mosey
If your business is growing and thriving, you may already operate in several states. Because each state has unique annual report requirements, keeping track of when and how to file may be difficult. Mosey’s automated business compliance is designed to help business owners keep track of state compliance issues, such as annual report requirements, and even do it for you.
Schedule a demo of Mosey to learn how we can simplify compliance for your multi-state business.
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