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Your Annual Report Is Due

March 31st, 2022 | Blog 31st, March at 4:20 PM

What is An Annual Report?!

All states impose a reporting obligation on some or all their domestic and foreign business entities. They also penalize companies that don’t comply, which is why it is so important to be familiar with this compliance requirement.

What is an annual report?

Statutory business entities — which include business corporations, nonprofit corporations, limited liability companies (LLCs), limited partnerships (LPs), and limited liability partnerships (LLPs) — are generally required to file an annual report each year. The report is essentially an information report the business files with the Secretary of State (or other entity filing office) where they were formed and every foreign state in which they are qualified to do business.

This filing provides the public, investors, the filing office, and other government agencies with the information necessary to locate and communicate with companies formed or doing business in the state. This report is required to be filed, in most cases, every year, however, there are a few states that require the report every two years or call it something different.

Annual report filing requirements

The requirement to file the annual report usually begins the year after formation of the entity or foreign qualification and continues until the company files to dissolve (formally end) or withdraw from the foreign it is registered in. An example of this is an LLC that was formed in March of 2021, would not be required to begin filing its Annual Report until 2022.

Of course, this is the general rule as some states only require the report every other yea, do not have any information reporting requirements, and some require an initial report within a short time of incorporation or foreign qualification.

As with most things, the specific information required in the report varies based on entity type and from state to state so it is important to review your state’s requirements. There are third party services that offer to complete and submit your Annual Report for you, but before hiring one you should ensure they know the requirements for your respective state(s).

Each state has laws on the business entity types which establish the baseline required information to be included in the report. The Secretary of State’s office may be authorized to require additional information they believe will assist with the filing process. However, the report generally must include, at a minimum:

  • The company’s legal name
  • In the case of a foreign company, the fictitious name it qualified under, if any
  • The principal office address in the state if any
  • The principal office address wherever located
  • The registered agent’s name
  • The registered agent’s office address
  • The names and business addresses of directors and officers (for a corporation), managers and members (for an LLC) or partners (for an LP or LLP)

Filing Details for Annual Reports

The states also vary greatly when it comes to filing details. For example:

  • Some states require annual reports to be filed before a fixed calendar date. Other states have a due date based on the anniversary of formation or qualification.
  • Some states prepare forms for each company, preprinted with the most current information on file. Others provide blank forms that must be filled out.
  • In some states the information report may be delivered to the filing office in paper form or electronically. Others will only accept reports that are filed electronically.
  • Most states require a filing fee to accompany the report. The fee may be a flat fee or may be variable. A variable rate may be based on a corporation’s authorized shares, the number of an LLC’s members or an LP or LLP’s partners, or some other basis. Some states charge nonprofit corporations no fee or a reduced fee.

What is the filing deadline for annual reports?

Some states require the report to be submitted on a set date, but some use the company’s formation date as the due date. It is important to know your state’s due date and stay up to date on any changes made from year to year. Some states will send a reminder notice in the mail or via email letting you know the report is due soon. Unfortunately, this is not the case for every state. If your business operates and is registered in multiple states it is your responsibility to keep up with the filing requirements for each state.

What happens if I don’t file a required report?

Failing to file the annual report results in fines being assessed and/or the business being limited or prevented from conducting business in the state. If the report is not filed by the due date a late fee will be charged. As more time passes without the report being filed, the company may fall out of good standing. Extended or excessive non-compliance with the annual report filing can result in an administrative dissolution (closure) of the business. If this happens, owners of the company lose the benefits of operating as an LLC or corporation. Your business does not automatically close or stop, but the protections associated with an LLC or corporation cease to exist and you expose yourself to more risk and liability.

Some Important Things to Know about Filing the Annual Report

  • Missing an annual report deadline can impact current or potential financing. An LLC or corporation that misses the deadline could lose its “good standing” status with the state, which can limit its financing options. Many lenders and funding sources require certificates of good standing. This cannot be produced if the state has determined that the company is not in good standing.
  • Failing to file can lead you to lose a contract bid. A failure to file could result in a loss of good standing—and that could cost a company the bid. Properly filing timely annual reports helps maintain a company’s good standing status in state records and keep it on track for success.
  • Annual report requirements continue even if you stopped doing business in a particular state. Even if a company stops doing business in a state where it previously registered, it still must continue to file there until it properly withdraws from the state. Otherwise, there could be failure-to-file penalties.
  • Filing your state income tax return does not take care of your annual report requirement. State annual reports and state income tax returns are different things. Even if one has already been filed, the other still needs to be filed.
  • You still need to file, even if you’ve never received a notice. Although some states send reminder notices, not all do. Either way, you still must file any required annual reports. The burden is on you to keep up with your deadlines and file on time.
  • Having a business license does not do away with your annual report filing requirements. Obtaining or renewing a business license is not the same thing as filing an annual report. Even if a company has all necessary business licenses, it still needs to file its annual reports.
  • Annual report filing requirements continue even after forming your company. Just like tax returns and business licenses, formation and incorporation filings are different from annual report filings. After forming an LLC or corporation, a “next step” is to file state annual reports.

Common Filing Mistakes

It’s not enough to just submit your annual report on time. You want to make sure it’s completed correctly to avoid your filing being rejected. Some common mistakes include the following:

  • Filing an incomplete report
  • Paying the incorrect fee or using an incorrect payment method
  • Having an unauthorized person sign or signing in the wrong place.

Conclusion

State corporation, LLC, LP, and LLP laws generally require the filing of a report with the state’s filing office. To avoid serious penalties, the individuals responsible for compliance for every company subject to this requirement should take all steps necessary to ensure that these reports are filed in a timely and complete manner.

For more information or assistance with filing your Annual Report Contact Us Today.

Overcoming the Challenges of Legacy Planning

February 16th, 2022 | Blog 16th, February at 12:13 PM

Latavia will be a guest panelist on the Southern Soul Show Thursday, February 17, 2022.You can watch the livestream at 8pm ET or listen to the episode the next day at https://www.soullivestream.com/.

Southern Soul Livestream is a Witty, thought-provoking, and uplifting, program that you’ll invite your friends over to watch every week, where you’ll learn about interesting guests and get to share in their fascinating experiences. Tune in each Thursday evening at 8 pm ET to connect with guests from across the generations and to laugh with our eclectic hosts who are as charming as they are talented!

What is a Legacy

December 22nd, 2021 | Blog 22nd, December at 12:13 PM

Webster’s defines legacy as a gift by will especially of money or other personal property. It is also something transmitted by or received from an ancestor or predecessor or from the past the legacy of the ancient philosophers.  Legacy for most that I know is what we are remembered for.  It could be a family tradition or reputation and respect associated with a name.  Those are important, but for many of us that is often the only thing we are given by our family members. That and a lot of grief and frustration over how to pay for things and how to move forward.  The term estate planning was a foreign concept to me growing up, and for a long time I thought it was only something “they” or rich people did.  I now know that estate planning is simply planning, and your plan can be simple or very complex. If you are alive, you have an estate and something worth planning for.

Planning for life after death is very important, but there are some things that can and should be done while we are still living. When thinking about estate planning, it’s important to also think about what happens if you are injured or are no longer able to take care of yourself.  Life is short and if we learned nothing else from 2020 and this pandemic, we know tomorrow is not promised.  We often put things off saying, I’ll do it tomorrow, or I’ve got time, but we never know when our time will be up.  I love life and don’t like to dwell on the negatives or spiral down the what if hallway. However, I know that taking a quick stroll or peek in is necessary. The two documents that everyone should consider and have regardless of health or wealth status are a living will (advanced medical/health directive) and power of attorney. A health care directive is written instructions for how your health care will be handled when you are no longer able to make decisions for yourself. Different states call it different things, but in the document, you can appoint someone as a healthcare agent and tell them what you want to do.  A common scenario is whether you want to be placed on life support or not, or whether you’d want to be revived or not.  There have been countless scenes in movies and television shows that talk about this, and even some high-profile cases in the news.  Being in emergency situations are difficult and stressful by itself, but if there is a question about what a loved one wants, it takes that stress to the umpteenth level.  Do you really want to deal with that? Do you want your loved ones to have to deal with that?! I don’t think you do. The way around that is to get a healthcare directive.  Most states have statutory or standard form that is recognized throughout the state and by all medical care providers.

It is my goal to make sure that when I die a part of my legacy will be that I helped educate as many as possible about the necessity and benefit of planning.  The same way we set goals for finances, education, and our health is the same approach we need to take for life after we pass. The term “if you fail to plan, you plan to fail” has become even more real to me.  If you are reading this, then you have taken a great first step in taking control of the plan your life and your family members.  The goal of this post is to introduce you to estate planning, what it involves, and highlight some of the key aspects.  This list is not exhaustive but will hopefully help in getting the conversation started.

Estate Planning

Estate Planning is the action of arranging a person’s life before their death. This minimizes the effects of gift, estate, generation skipping transfer, and income tax. The size of your estate, or assets, will determine the level of detail needed for your plan.

Will

A written legal document that addresses what you want to happen when you die, who will care for your minor children, property, money, miscellaneous belongings, etc.  To obtain a Will, you must be at least 18 years old and have the capacity to enter a contract. To be valid the Will must be signed, and most states require two witnesses.

Advanced Medical Directive

Advanced Medical Directive written instructions for how your health care will be handled when you are no longer able to make decisions for yourself.

Power of Attorney

(use with caution)

Written consent that can be given to a person so that they have the authority to act on another person’s behalf regarding private affairs, business, or other legal matters.

Things to Consider in Preparation

  • Identify Goals
  • Identify loved Ones
  • Children or those with Special Needs
  • Assets
  • Burial or Cremation
  • Organ/Body Donation
  • Charitable Contributions
  • Insurance Policies

Things a Will Won’t Handle

  • Property you’ve transferred to a living trust
  • Life insurance proceeds
  • Funds in an IRA, 401(k), or other retirement account
  • Securities held in a transfer-on-death account
  • Payable-on-death bank accounts, or
  • Property you own with someone else in joint tenancy or tenancy by the entirety.

A Few Things to Consider

December 14th, 2021 | Blog 14th, December at 11:45 AM

There are countless checklists and guides for starting a business (including mine), but there are a lot of things that those lists miss, leave out, or just can’t accurately capture. Those are the intangibles or “things that you don’t know, you don’t know”. With that in mind I wanted to share things to consider based on lessons learned personally and from the experiences of business owners I’ve worked with. Here a few of the often-unspoken things to consider.

Know your WHY

Why do you want to be in business for yourself? There are many reasons people decide to go out on their own and be their own boss, but everyone has at least one reason. You don’t like being told what to do? Want more freedom? Setting your own hours? Those are cool, but will they be enough to sustain you in the moments when you are struggling with getting clients or unsold inventory? The reason could be as simple or complex as you want, but it needs to be something you can readily recall and/or express. It’s not a matter of if you will need to remember it, but when because those days and times will come. Be sure to take some time to consider and evaluate your why before you take that leap of faith to start the business.

Doing what you love vs. Running a business

I enjoy making waist beads and other types of jewelry; it’s a hobby of mine but turning it into a business is very different. The same is true for just about everything you could think of doing. Someone could be a great mechanic, very successful at their respective job, and decide they want to start their own. Going from employee to owner is a big jump in responsibilities. As the owner you now must make sure you stay current on industry standards and practices AND make sure the business is functioning and compliant with all relevant laws. It requires you to find a balance and to create systems to be sure you stay on top of things like taxes, inventory, supplies, payroll if you have employees, when and how to pay for expenses. This is not intended to deter you from starting your own business, but to help you go into it with your eyes wide open.

Be Flexible

I am currently learning and living through this as I build my business. Almost all checklists and guides say you need to develop a plan, which is true. However, you must also plan for that plan not going the way you expected. It is important to have a plan, but equally as important to be ready and willing to pivot and change courses when needed. Living through a pandemic has required everyone to figure this out in some way shape or form.

Find Your Village

This is a necessity for life in general, but it has a different meaning and context when you are running a business. As supportive as they may be, family and friends aren’t always able to help or understand what is needed to maintain and grow your business. Having mentor’s, peers, and go to people and sources within your specific industry is invaluable. I am beyond grateful for the community of like-minded attorneys I have been able to connect with; just knowing there are people going through similar things makes a world of a difference. There will always be someone with more experience than you and there will always be someone coming up behind you. Finding and cultivating your village is a major key to success.

Communication

How you communicate in your personal life does not always work for your professional. However, knowing your personality and communication style is important when running a business because you are required to communicate with a variety of people. If you are one person show, then you must manage communicating with clients, vendors, suppliers, accountants, and anyone else encounter as an owner. Once your business grows and you have employees, you must figure out and manage how they communicate. We all have different personalities and communication styles, but to successfully navigate the inevitable challenges we must take the time to learn about those around us. Don’t assume that because what you’ve been doing has worked, that it will continue to do so. A part of being flexible is being willing to adjust how we communicate with ourselves and others.

There are other things to consider, but these are some of the big ones that have helped me. I’d love to hear about your experiences or things you’ve learned along the way.

Getting to the Starting Line and Out of the Starting Blocks

December 8th, 2021 | Blog 8th, December at 3:33 PM

Entrepreneur’s Checklist

  • Business Plan- How will the business operate/function? There are several templates and models for writing business plans, but there is no one size fits all.  Begin by writing out what you want to do, how you will do it, who, if anyone will help provide the service, how it will be funded, how you are going to market and make money.  You want to at least have a written proposal or guide for yourself and for others to see where you are going; especially if you are seeking investors or a loan.
  • Secure EIN – You will need an Employer Identification Number (EIN) for your business as it will be the business’ identification number.  The same way you use your SSN for personal identification and verification, is the way the business will use your EIN. The EIN will be needed to open your business account, used for contracts, and when you file taxes for the business.
  • Identify your niche – Decide what your focus area will be, your approach, and how your business will be different from others. Even if your business is the same as one already out there, they aren’t you. Picture the bread or cereal aisle in the grocery store; there are plenty of options for the same basic product. Think about what makes you and the service or product you provide unique.
  • Marketing/Branding – you’ve got a great service or product, but how will people know if they can’t find you?
  • Select your Business Structure/Type – some of the most common are Sole Proprietor, Corporation, Non-Profit, and Limited Liability Corporation (LLC). An LLC is often the ideal choice for small business getting started.
  • Protect Your Brand – Your designs, logos, original creations, and all of things that may you and your business unique need to be protected.  Be sure to speak with an attorney about registering your intellectual property for trademark and copyright protection.
  • Secure a Domain Name – this is your business’ digital address, and will be one of the primary ways clients/customers find you.  Be sure to obtain and secure a domain name that is relevant to your business’ name and/or brand.
  • Business Accounts – One of the ways to maintain separation between yourself and the business to have a business account for all things business related.  You need to avoid using personal funds for the business. If there is ever an issue and someone wants to sue you, they can come after your personal assets if there is no clear line between what’s business and personal. Check out NerdWallet’s recommendations for small business accounts.
  • Insurance – You have (hopefully) health, car, and home/rental insurance for you and your family’s protection against the “what if’s”.  The same is true for your business. Some industries require specific types of insurance while others don’t, but it’s good practice to have a base level insurance for your business.  We hope and pray that it is never needed, but please don’t put yourself at risk of not having it and needing it.  Be sure to check to see what types of insurance is required for your specific industry.
  • Identify and Obtain Appropriate Licenses – Several industries require you to have a license to provide your service. Attorneys, counselors, cosmetologists, barbers, mechanics, etc. all must be licensed to conduct business. These license types are typically well known, but some states and cities require specific licenses to operate in that area. Examples of these licenses include, but are not limited to, a general business license, operator’s license, privilege license, commercial licensing, and zoning permits. Be sure to check with your state and city’s licensing commission so you know what license you will need to operate your business.

* Of course, it is also strongly encouraged that you speak with an Attorney (I’m available) and an accountant as a part of this process.  There are several moving parts to opening and running a business, and it is not advisable to try and do it all alone.  This is a quick guide to get your wheels turning.

Thinking about starting a business? Schedule a Consult with Latavia today!