For those of us who work in corporate law, we have a familiarity and a soft spot for annual reports. Although they can become tedious, they are very important in maintaining compliance for our entities. For those of you who are not familiar with annual reports, let me explain.
A company, whether it is formed as a corporation or an LLC, is required to register with the Secretary of State. It is important to note that this division may have a different name in different states. For example, in the Commonwealth of Virginia, this office is called the State Corporation Commission.
After a decision has been made to incorporate, your papers are initially filed with the Secretary of State in the state of domicile (home state). Upon acceptance of your filing by the state, your company becomes active. Depending on your business, you may have a need to register to do business in other states as well. This registration is completed with each states' Secretary of State's office.
Most states require your annual or biennial report to be filed on the anniversary date of incorporation, within three months of the end of your company's fiscal year, or at any other time they desire. The purpose of annual/biennial reports is to update your records with the Secretaries of State and to pay a fee to continue doing business. Most states require an updated officer and director list. Some states require financial information (assets and liabilities). Most fees are set fees, but some states base fees on your company's paid-in-capital (i.e. Illinois).
Although filing an annual report is not the most complex task, it is a very important one. Failure to file can result in administrative dissolution/revocation along with fines and penalties. If your company has been administratively dissolved or revoked, you must contact the state (or your registered agent) to determine next steps for reinstatement.
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