Why Annual Reports Need To Be Submitted In Good Time

photograph of a business owner going over annual reports with an accountant
Why do companies need to submit annual reports in good time? Learn about the importance of these documents and how they can help your business succeed.

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Why do state authorities require your business to submit an annual report? What makes it so hard?

The thought of starting a business can be exciting… until you get to all the documents, fees, and other unexpected business responsibilities.

As a business, specifically LLCs, corporations, or limited partnerships, submitting an annual report is one of those strict obligations. This ensures all aspects of your business operations are up to date and that you are maintaining an active status within the state in which you’re operating.  

In this article, we’ll discuss all there is to know about annual reports and why every business should keep good business records and submit them on time.  

What is an annual report?

An annual report is a document that contains a company’s vital information for the given fiscal year, including:

  • Financial performance
  • Company hierarchy
  • Activities
  • Other important data depending on the location of your business 

This document can also be used as a marketing tool to showcase your company’s track record with potential investors. Moreover, it helps maintain transparency for your employees and current shareholders.

* The aforementioned vital information helps keep your business active in the eyes of the state. 

Do all states require annual reports?

This is where entrepreneurs and business owners get caught in a pickle. Each state follows a different set of laws, guidelines, and even deadlines. This makes it difficult to create a one-size-fits-all approach to submitting annual reports, especially if your business operates in multiple states.

So, which states require annual reports and which don’t? For businesses in Delaware, for example, annual reports are required each year and must be submitted before March 1. 

In states like New York, Nebraska, Iowa, Indiana, and Alaska, businesses are required to submit a report every two years. Some call this document a ‘biennial report.’

For states like Arizona, South Carolina, Ohio, and New Mexico, no mandate requires a business to submit an annual report. However, businesses are required to submit detailed reports to different government entities. 

Lastly, Pennsylvania requires an annual report every 10 years, although professional LLCs must file an Annual Registration every single year. 

And this doesn’t even cover the filing deadlines, which also vary by state! 

To make sure you’re getting it right, start by visiting your preferred state’s website to know more about their business requirements. The contrast between different states in the submission of annual reports makes it easy to mix it all up.

This can cause problems when starting a business, leading you to lose focus from achieving your long-term goals. This is where a registered business agent can come in handy. They can take care of filing all your reports, documents, and other legal business needs. There’s no doubt that hiring a registered business agent will allow you to focus more of your time on innovating your business. 

What happens if your business submits a late annual report or doesn’t submit one at all?

You’ve probably already seen this one coming. A failure to submit an annual report (or submitting them after the deadline) will result in a late filing penalty.

What’s more, the punishment doesn’t stop there. When you consistently neglect or delay submitting your annual reports, it can result in:

  • Loss of corporate protection
  • Diminished tax advantages
  • Jeopardize your ‘good standing’ with the state
  • Suspension of your business
  • Dissolution of your business 

What can you do if you submit an annual report beyond the deadline?

If you’ve only gone a few days past the deadline of your state, it’s not the end of the world. Your business will only be required to pay a late filing fee. However, if you submit it weeks or months after, it can result in severe penalties including dissolution, forcing you to file a reinstatement form. 

Why are annual reports useful for your business?

 photograph of two entrepreneurs discussing their business records
Image source: Canva

  1. They give you a chance to redefine your business strategy 

When it comes to setting your business up for success, not everything will go as planned. Your annual report gives you a chance to assess which to double down on and which to ditch. If you want to drive your business forward, you’ll need definitive answers to the following questions:

  • Are you clear about how you choose to create value in the marketplace?
  • Can you describe what sets you apart from other businesses?
  • Are you investing in the capabilities that really matter?
  • Does your organizational structure and operating model support the entire workforce? 
  1. They help you set goals for the upcoming year

There’s nothing wrong with setting expectations for what you plan to achieve in the upcoming year. 

Assessing your company’s annual report will help you come up with attainable goals to keep everyone in the business motivated the whole year round.

  1. They allow you to assess if your goals were met

It can be easy to get caught up with everything that goes on in your business during the year. Having an annual report will make this a lot easier for you. It allows you to assess if your goals were met or if you need to go back to the drawing board.

Final thoughts

Starting a business is more than having a perfect idea – it requires in-depth research and understanding of all aspects before you make any impulsive decisions. 

As a business owner, it can be difficult to achieve your business goals, especially if you operate in different states. If you want to avoid the headache of paying hefty penalties, or risk the possible dissolution of your business, it’s best to hire a professional. This will ensure that all the paperwork is completed correctly. 

What’s more, it gives you more time to concentrate on what’s important – growing your business.      

“I don’t care how much power, brilliance or energy you have, if you don’t harness it and focus it on a specific target, and hold it there you’re never going to accomplish as much as your ability warrants.” – Zig Ziglar

Featured Image: Canva

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