Q: We haven’t used our LLC company yet. Do we still need to pay for the annual report? Can we pay it later?
Thank you to a client from Wyoming for that great question! Filing your annual report is necessary to update the state on your business information and keep your company in good standing. But if you haven’t actually set up shop or made a sale, do you need to submit your annual report? Short answer? Yes. We’ll explain why you still need to file an annual report even if you haven’t made a sale, and how to do it.
Why do I have to submit an annual report if I haven’t made any sales?
If you’ve filed your formation documents to start an LLC or a corporation and been approved by the Secretary of State (or equivalent government office), you’re on the hook for filing state reports—even if you haven’t made a single sale.
Since filing an annual report is necessary to keep your business in good standing, it is required regardless of the money a business has earned. Think of registering your business like signing up for a gym membership—you’ve got to renew your membership every year, even if you never actually went to the gym last year. Otherwise, you won’t be a member of that gym anymore. If you want your business to exist going forward, you’ll need to stay in compliance with your state, which means filing the annual report.
Who has to file an Annual Report?
In most states, LLCs and corporations need to file an annual report. So, if your business is a sole proprietorship or a general partnership, you don’t need to file an annual report, whether you’ve made sales or not. Every state has different annual report requirements, so check with your Secretary of State (or applicable government agency) to see if and when you need to file. For example, some states have biennial reports (due every two years) instead of annual reports, and Pennsylvania has a decennial report you only need to file every ten years. In Ohio, businesses aren’t required to file any sort of annual or biennial report.
How do I file my Annual Report?
Filing your annual report is generally an easy process, though the exact specifications change state-to-state. Some states require that you file online, while others require filing by mail. Most let you choose between online, mail, and in-person drop-off, but you’ll need to check with your Secretary of State to be sure. Generally speaking, the application requires you to fill out your business’ information, update anything that is new, and pay a fee. You can file yourself or hire an outside service to file for you.
Learn how to file an annual report in your state.
What happens if I don’t file my Annual Report?
If you don’t file your annual report, there will be consequences—what exactly those consequences are depends on your state. The consequences range from a late fee to the business being administratively dissolved. Each state has its own process for dealing with non-compliant businesses. Some states charge a late fee if you file your annual report a single day late, while other states offer businesses a grace period to get their filings in before charging an extra fee. Your state’s exact consequences are decided by the Secretary of State (or equivalent office).
Using our client’s case as an example, the Wyoming annual report is due by the first day of the business’ anniversary month. Wyoming gives all businesses a sixty day grace period after the due date to turn in their report. If the business doesn’t file their annual report by the end of the grace period, it will be administratively dissolved.