Does My Company Need to File an Annual Report?

March and April are months in which individuals and companies are often thinking about preparing and filing tax returns. If you own or work for a company, these months are also typically when you must file an annual report.

Annual reports are not tax returns. Sometimes this is a point of confusion for new companies because they assume filing a federal and/or state tax return satisfies their annual filing requirements. Unlike tax returns, annual reports are typically filed with the Secretary of State’s office in each state where you are qualified to conduct business. (For most companies this is only the state in which the company is organized; if your company has become qualified to conduct business in other states, you must file there too.)

In every state of which I am aware, annual reports may be filed online. If your company is organized or qualified to do business in North Carolina, you may benefit from this short video I created. I walk you step by step through the process of filing an annual report for an LLC in North Carolina. The process is nearly identical for a North Carolina corporation. Even if your company is organized in a state other than North Carolina, you might still benefit from watching the video because the process in most other states is similar.

It is important to complete your annual report on time, or your company risks being administratively dissolved by state authorities. Administrative dissolution can be damaging to a company and its owners. While dissolved, a company’s actions may be considered void or voidable, and a company can no longer bring lawsuits or legal proceedings. Further, it opens up the owners to unlimited liability because the limited liability protections disappear when the entity is dissolved by the state. Administrative reinstatement can be a costly and complicated process, with no guarantees that the company can be made completely whole again.

In addition to keeping your company in good standing with the state, it is good practice and legally advisable (and required by law in some cases) that an annual meeting be held, and annual minutes placed in the minute book of your company. Keeping good company records benefits you in a number of other ways, including reducing the risk of losing your limited liability protection and making your company a more attractive target for investment, acquisition, or other exit event.

If you need our firm’s assistance in filing this report or would like for us to handle filing it this year and/or in the future, please contact us at 704-837-0055 or info@chrisclark.law.