What is the Annual Report?

Most people tend to confuse the Annual Report with the Income Tax. This is the reason why we have decided to clarify this information, expanding the definition of the Annual State Report.

The Annual Report, state Annual Report or Franchise Tax in some states, is the renewal of your company in the State where it is incorporated and carries out its commercial activity for the current fiscal year. This mandatory report updates or confirms the company's status with each state. In most states, it is not usually linked to the economic result of a company, but to the Administrative, Operating Status and in some states, to the Net Worth or Capital that the company possesses. It is important that the data provided is as up-to-date as possible, since this will be the reference information for any state entity and management.

Although it is true that at the time of submitting the Annual Report of your company, a fee or commission must be paid to the state for the renewal and maintenance of " Active Status ", the latter is not called a tax in most states, since that fee is not subject to any net financial result.

Unlike the Annual Report, the Income Tax (Income Tax Declaration) is a Federal (National) tax where the Profits / Losses (Financial Information) are related and in relation to them, the tax is paid.

011. Can I make adjustments when filing the annual report?

Indeed, in some states, such as Florida, at the time of filing the report you will have the option to change the following information:

1. Add, delete or modify the names, positions and/or addresses of officers, directors, managers, authorized members; and make address changes for general partners only.

2. Change registered agent and registered office address, entity 's main office address and mailing address .

The annual report does not allow you to change the name of your company. To change the name, you must make an Amendment, which is a different form and procedure.

In other states such as Delaware and California, they don’t allow making any type of changes at the time of submitting the Annual Report, if not only updating the information requested in the relevant forms .

022. When should I pay the fee or comission to the state?

The payment of this fee will depend on the state where you have incorporated your company or where it carries out its commercial activity . In some states it must be done before the first half of each year, and in others it will depend on the date of incorporation.

033. What happens if I don't submit the Annual Report?

The non-presentation and payment of the annual renewal causes penalties, fines and even the administrative dissolution of the company, in addition to not being allowed to carry out commercial operations.

administrative dissolution, your company may be reactivated, as long as you pay the fee for reinstatement and the debt for the omission of the presentation of the obligation.

04Examples:

⮚ In Florida, the deadline for submitting this Renewal is May 1 of each year. Failure to file this formal duty with the State of Florida will result in a $400 late fee for all for-profit companies.

⮚ In Delaware failure to comply with this formal duty will result in a $200 penalty plus 1.5% interest per month on taxes and penalty.

These values do not include the reactivation of the company.

054. Can I make adjustments when submitting the Annual Report?

In some states you can make amendments to the submitted Annual Report. However, you must pay a fee for this change, depending on the type of company. In states such as Delaware, Texas or California, a different process, known as an amendment, must be followed to present such adjustments.

For example, in the state of Florida, if the entity is a corporation or LLC, it may file an amended annual report. If it is a for-profit or non-profit corporation, it has a value of 61.25 USD. In the case of an LLC, 50 USD.

Each state handles different modalities and rates on amendments in this type of report.