As a business owner, there comes a time each year where you sit down and discuss the next year. You go over important things like income, taxes, business goals, where you see the company in three years, etc.
This is for your personal organization purposes. The state in which you formed an LLC likes to do a similar action through a document called an annual report.
In many states, LLCs are required to file annual reports. However, each state has its own report requirements for LLCs and different types of business entities.
How do you write an annual report for an LLC? What information is required for the state of Texas? If you fail to file annual report, will the state dissolve your LLC?
Let us help answer these questions and more about annual reports!
What is an LLC?
A limited liability company (LLC) is a business structure in the United States whereby the owners are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
What is an LLC Annual Report?
An annual report is a filing that details a company’s activities throughout the prior year. Annual reports are intended to give state governing authorities information regarding the names and addresses of directors or managing members of a corporation or LLC as well as the company and registered agent address.
The purpose of an annual report is to keep your LLC updated and in good standing with the state.
Information Included in the Annual Report
The exact information required for your annual report varies from state to state but generally includes the following:
Company Address – the physical address of your business and be sure to update this if any changes have occurred within the last year.
Managers – file the names and addresses of the LLC managers and update any information on any of them.
Purpose of Business – if the purpose of your business has changed within the last year, now is the time to file that information.
Business ID numbers – any business ID numbers that you have used or plan to use.
Shares issued by the company – this is also important tax information, so keep this information handy.
Registered Agents – the name and address of the registered agent (update if needed).
How to file an Annual Report?
Once you have completed the form for an Annual Report, you must then submit it to the state along with the required filing fee. You can submit this at the state office or online.
In Texas, filing an annual report is not required. If you choose to file, the annual report costs $200 and is due no later than June 1 of each year following the year in which the application for registration takes effect.
When it comes to filing details, states vary greatly. For example, some states require annual report, others do not. Some states prepare forms with the most current information on file, others provide blank forms for the members to fill out. Regardless of the state you file an annual report in, you’ll almost always find a filing fee attached to it!
What Happens if you don’t file an annual Report?
Annual reports tell the state that your business is still in compliance and active. Filing an annual report in Texas can often be confusing because the requirements for doing so depends a lot on how the state classifies your business.
If you do not file on time, the state can terminate your LLC and you’ll have to work hard and pay extra to have it reinstated. In addition to the filing fee, you’ll also have to pay a $50 late fee, plus a 5% penalty on the taxes you owe. If you don’t pay within the first month, the office will charge you another 5% penalty.
Paperwork is always tedious and it’s inevitable that busy business owners will miss an important part of a business form like an annual report. When dealing with any business form, it’s always best to consult (and work) with a business lawyer to ensure all information is correct and you stay in compliance with the state.
AUTHOR
Brandi L. Joffrion, Esq.
Brandi Joffrion is a skilled attorney with extensive experience in diverse areas including litigation, estate planning, and creating limited liability companies and corporations. She is also a professor and former offshore anti-money laundering compliance officer. Brandi can provide you with particular advice on your specific situation in the areas listed above. Brandi is licensed to practice law in Colorado.
