If you’re in business, there’s two terms you’ll want to know: annual reports and franchise taxes. 

Once you form your corporation or LLC in a state, you’ll need to periodically file an information report, usually called an annual report, with that state.

A franchise tax may also be due at the same time as your annual report, depending on the state. A franchise tax is generally a tax imposed on the privilege of carrying on a business, for example, as a corporation or LLC. Usually it’s based on authorized shares or business income.

CT Tip: Each state has its own annual report rules, so the precise information and filing requirements differ from state to state. If you’re expanding into other states, it’s good to keep this in mind. 

Various states use different names, too, for their annual report filings, such as:

• Information Update
• Annual List
• Statement of Information
• Annual Renewal

Usually, annual reports are just that – reports due once per year. In states with biennial reporting, annual reports are due only once every other year.

CT Tip: Your LLC or corporation has to file annual reports with the state where it was formed – where you filed to become an LLC or corporation. If you do business in other states, you’ll also need to file annual reports in the states where you qualified to do business. 

What Types of Information Do Annual Reports Call For? 

Typical annual report information includes the names and addresses of the:

• business
• registered agent
• directors and officers (for a corporation)
• managers and members (for an LLC)
• partners (for an LP or LLP)

If the state imposes a franchise tax, the report may also ask about authorized shares, par value, business assets and income, or similar items.

As you can see, annual reports ask for fairly straightforward information. They generally call for at least the information necessary to locate and communicate with a business entity. 

Keeping up with annual reports helps your business stay in good standing with the state. They’re fairly simple, consistently periodic, but very important!

When Are Annual Report Due Dates?

Annual report due dates vary by state. Some tie the date to your LLC or corporation’s “anniversary” – the date you formed your business entity. 

Other states just set one date – like March 1 – as the due date for all LLC annual reports every year (or corporation reports, as the case may be).

CT Tip: Tying due dates to business anniversaries allows a state’s filing office to “spread out” the number of reports it receives over a one-year period. This helps it to avoid receiving an influx of reports all at once.  

A state might also set different due dates for LLC annual reports, corporation annual reports, etc.

Usually there’s a state filing fee, which generates funds for the state. It might be in the neighborhood of a few hundred dollars, unless you’re lucky enough to be in a state with no fee at all. 

CT Tip: Be sure to remember annual report fees and any franchise taxes when budgeting. They come up routinely – usually once a year. Some states only require a report every other year.

Some states might grant a filing extension for “good cause,” but it’s almost always better to file on time. 

What if I Forgot to File My Annual Reports on Time?

Annual report filing can be tedious, but it does need to be done timely. Some states (but not all) provide a “grace period” and allow you to pay a late fee. 

If your business doesn’t keep up with its annual report filing, it could lose “good standing” status with the state. Ultimately, the state could administratively dissolve the LLC or corporation or revoke authority to do business. If this happens, the business should consider trying to get reinstated. In essence, failing to file your annual reports endangers the many benefits of operating as an LLC or corporation – including limited liability.

CT Tip: In many respects, a business that doesn’t file its annual reports on time is like a car leaking oil. The situation may be simple at first, but it gets incrementally harder (and more expensive) to fix the longer it continues.