What Is an Annual Report?

Certain types of business entities, like limited liability companies, corporations and nonprofits, must file an annual report every year. Annual reports are an important part of staying in good standing with the state, meaning the company is legally allowed to operate.

Other names for Annual Reports 

The term “annual report” isn’t the formal name used in every state. Depending on where your business is registered, you might hear different names for the same document. Here are a few:
 

Some states don’t require you to file an annual report every year, so it becomes a biennial report, meaning it’s due every two years instead of every year.
 

State-Mandated Annual Reports vs. Annual Reports for Shareholders

There are two types of annual reports: state-mandated annual reports and annual reports for shareholders.
 

Both types of reports are important, but they serve different purposes. The shareholder report helps keep investors informed on the company’s financial data in the fiscal year, while the state report keeps the company legally compliant.
 

What is Required on an Annual Report?

An annual report tends to be pretty objective, but the exact details can vary depending on where your business is located. Usually, you’ll need to give the following information:

• Official company name.
• The main address where your company operates and receives mail. It cannot be a P.O. Box.
• Registered agent information. 
• The names and addresses of the people in charge, like your CEO or board members if you have a corporation or even members and managers if you have an LLC.
• Some states ask for a brief description of your company’s activities. For example, if you run a restaurant, you might say, “food and beverage services.”
• If you have a public company, you might need to include details about how much stock your company has issued and to whom.
• A signature from someone in charge, like an officer or manager.

The main purpose of the state-mandated annual report is to keep the state informed about who is running the company and how to contact them. The shareholder’s annual report, on the other hand, is supposed to give investors a better understanding of your company’s financial performance. 
 

What Happens if I Don’t File an Annual Report?

Knowing how and when to file an annual report is critical, since not filing can lead to some serious problems for your business. Here’s what might happen:

1. Late fees and penalties: many states will charge a late fee. Depending on where you’re located, this fee can add up quickly – the state might assess penalties that can cost even more.
2. Legal trouble: missing out on important legal notifications is another risk. For example, if someone sues your business and you haven’t filed your annual report, the legal papers might not get delivered to the right person, which could result in losing a case simply because you weren’t aware of it.
3. Loss of good standing: your business could lose its good standing status with the state. Without that, you may not be able to do important things like sign contracts, get loans, or expand your business.
4. Dissolution: worst-case scenario, if you don’t file your report for a long time, the state might even dissolve your business. This means you could become personally responsible for business debts or lawsuits, which is something the business structure is supposed to protect you from.
5. Reinstatement fees: if the worst happens and your business loses its good standing or gets dissolved, you’ll have to pay extra fees to get it reinstated. These fees can be costly, and the process can take time.
    

File your Annual Report with Rocket Lawyer

Now that you have the answer to “what is an annual report?”, filing an annual report is essential for keeping your business running smoothly and avoiding these potential problems. Make sure you know when your report is due and get it filed on time! Rocket Lawyer’s registered agent services may help you stay organized and not miss deadlines.