There’s a lot of paperwork you need to complete and file when you’re running a business, and one of the most common is the annual report. While requirements for completing and returning these reports do vary between states, if you’re legally required to file one, you should always do so. Failing to file an annual report can cause serious problems for your business.
We’ll explain the penalties for not filing your annual report, let you know how to avoid them and ensure your business stays in good standing.
Are Annual Reports Mandatory?
In most cases, yes. If you’re in a state that requires an annual report for your business type, then you must file the report, on time, with the right state agency. But, it’s worth breaking this down a little further.
The following business types must file a report if required by the state:
- Single-member and multi-member LLCs
- S Corporations
- C Corporations
- Nonprofits
Exemptions for Filing an Annual Report
You do not need to file an annual report if either of the following are true:
- You run a type of business that does not require an annual report.
- Your state does not require businesses to file annual reports.
Types of Businesses That Do Not Need to File an Annual Report
Sole proprietorships and partnerships are two business types that don't need to file an annual report. If you haven't created a separate legal entity for your business, then you don’t need to file an annual report. This means sole proprietors and general partnerships are generally not required to complete and file a report.
Some States Don't Require Annual Reports
Your state may not require businesses to file annual reports. Some states, like Alabama and Ohio, don't require you to file an annual report at all. Other states, like New York or Indiana, require you to file biennially (every two years).
Learn If You Need to File an Annual Report
We have an ongoing filing compliance tool that tells you exactly what reports you need to file and when. Just enter your business type and state, and we’ll share important information about your annual reporting needs:
- How often your report is due
- When the report is due
- The filing fee
- Other important reporting information
What Happens to Businesses That Don’t File Annual Reports?
The penalties for not filing an annual report, or filing one late, can range from paying fines to having your business dissolved. Let’s break down what that means to each type of business.
Please note that exact penalties will vary from state to state.
Do Single-Member LLCs Need to File an Annual Report?
If you have formed your LLC in a state that does not require annual reports, then you do not need to file. Otherwise, single-member LLCs do need to file a regular report. The penalties for not filing an annual report are typically as follows:
- After failing to file your LLC annual report on time, the state will write to you and may impose a late filing penalty that you must pay in addition to your regular annual report filing cost. The state will tell you when you must file by to avoid further action.
- If you still do not file, your LLC will lose its “good standing,” which may make it more difficult to run certain business operations.
- If you still do not file, your state agency will dissolve your LLC and strike it off the register. At this point, you will lose your liability protection and won’t be able to continue as an LLC.
Do Multi-Member LLCs Need to File an Annual Report?
Yes, multi-member LLCs do need to file a regular report. The penalties for not filing an annual report are typically the same as for a single-member LLC.
Do Corporations Have to File an Annual Report?
If you have formed your corporation in a state that does not require annual reports, then you do not need to file. Otherwise, yes, S Corporations and C Corporations do need to file a regular report, and in some cases, this may be more rigorous than for smaller businesses. The penalties for not filing an annual report are typically:
- After failing to file your corporation’s annual report on time, the state will write to you and may impose a late filing penalty that you must pay in addition to your regular annual report filing cost. The state will tell you when you must file by to avoid further action.
- If you still do not file, your corporation will lose its “good standing,” which may make it more difficult to run certain business operations.
- If you still do not file, your state agency will dissolve your corporation and strike it off the register. At this point, you will lose your liability protection and won’t be able to continue as a corporation.
What Other Issues May Come from Not Filing an Annual Report?
If your corporation or LLC is dissolved, this will cause issues with:
- Not being able to do business under that business name
- Making it more difficult to attract suppliers, partners and customers
- Causing issues with business ownership and shareholders
If your business is dissolved, you can normally pay an administrative fee, file your overdue annual reports and file some other paperwork to get reinstated.
Avoid Issues from Filing Annual Reports Late
Fortunately, it’s easy to avoid all of these late report filing problems by having Incfile handle your annual report on your behalf. We provide a complete annual report filing service that takes care of your legal requirements. Even better, if you form your business with us, we’ll send you reminders to file and take care of it on your behalf, for your complete peace of mind.
Paul Maplesden
Paul is a freelance writer, small business owner, and British expat exploring the U.S. When he’s not politely apologizing, he enjoys hats, hockey, Earl Grey Tea, mountains, and dogs.
