Are There Penalties for Not Filing an Annual Report?

Many businesses and small business owners view filing annual reports as a burdensome chore accompanied by an additional fee. However, these reports are crucial repositories of essential contact and corporate information for business operations. The requirements for annual or biennial reports differ across states and depend on the entity type. In this discussion, we will concentrate on New York while also providing insights into the regulations of other significant states.

What is an annual report filing?

Depending on the state, filing an annual report with the Secretary of State or other filing office is mandatory for registered businesses, such as corporations, limited liability companies (LLCs), and other entity types. Typically, it is due once a year, though some states may require biennial (every two years) submissions. Pennsylvania just changed its filing due dates from 10 years to annually!

The annual report is due to the Division of Corporations or Secretary of State within the state where your business is registered. The information required varies from state to state and is required in addition to tax payments and other annual fees. Annual reports must be filed in each state where you do business.

What is a Biennial Statement for a Business Corporation or Limited Liability Company?

Section 408 of the New York Business Corporations Law requires domestic and foreign business corporations to file a Biennial Statement with the New York Department of State every two years.

Section 301(e) of the Limited Liability Company Law requires domestic and foreign limited liability companies (LLCs) to file a Biennial Statement every two years with the New York Department of State, setting forth the address to which the New York Secretary of State shall mail a copy of any process accepted on its behalf.

The statutory fee for filing a Biennial Statement for a business corporation or LLC is $9. Expedited handling is not available for the filing of Biennial Statements.

What information is in an annual report?

Annual report information varies from state to state, but most require these common data points :

  • Business name and any DBA (Doing Business As) names
  • Principal business address and, if different, the mailing address
  • Names and addresses of the business’s officers, directors, or members
  • The street address of its principal executive office,
  • Registered agent’s name and address (the registered agent is the individual or company designated to receive legal documents on behalf of the business)
  • OR the address to which the New York Secretary of State shall forward copies of the process accepted on behalf of the corporation
  • Business purpose
  • Stock information, if applicable (such as number of shares authorized and issued)
  • Depending on specific state requirements, you may need to list the number of directors constituting the board and how many directors of such board are women.

Why should I file my annual report?

A corporation or LLC that fails to file its Biennial Statement will be reflected in the New York Department of State’s records as past due. Any Certificate of Status or status letter from the New York Department of State will also reflect that the corporation or LLC is past due. This may prevent the corporation or LLC from completing certain business transactions.

Litigation with corporations and LLCs is often initiated by the service of process on the New York Secretary of State as the agent of the corporation or LLC. The New York Department of State is required to send a copy of such process to the corporation or LLC at the post office address on file for service of process. Many companies move their location and neglect to notify the New York Department of State.

It is critical to note that filing a Biennial Statement allows a corporation or LLC to update its address for service of process and avoid the possibility of a default judgment.

What happens if I do not file my annual report?

In New York, as in most states, failing to complete annual report filings can result in excessive fines and inactive or involuntarily dissolved status. The fee in New York is $250.

Corporations that have been delinquent in filing returns or paying taxes or fees for two consecutive years may be subject to sanctions imposed by the New York Secretary of State.

  • New York State corporations may be dissolved by proclamation.
  • Corporations formed under the laws of another state or country may have their authority to do business in New York State annulled by proclamation.

A corporation may regain its ability to do business in New York State through reinstatement.

  • New York Tax Law sets the requirements for reinstatement of New York State corporations (section 203-a) and foreign corporations (section 203-b).
  • Once the corporation is reinstated, it re-acquires the same powers, rights, and obligations before it was dissolved by proclamation or had its authority to do business annulled.

The importance of a Registered Agent when filing an annual report

Naming a Registered Agent for your entity can ensure that legal and tax correspondence are properly communicated and sent to the organization. The Registered Agent will notify you when annual reports are due to keep your entity compliant with jurisdictional filing requirements.

Hiring a professional Registered Agent will give you peace of mind.

Accumera offers extensive corporate services, encompassing annual report filing, company formations, amendments, registered agent services, and Corporate Transparency Act filings. As your professional Registered Agent, we guarantee the prompt delivery of all official communications from the filing office. Furthermore, we provide reminders for your biennial statements to ensure you never miss a deadline. Please take a moment to discuss with our team how Accumera can assist in maintaining your compliance and ensuring your business remains in good standing.

Nationwide Provider of UCC and Corporate services

Resources:  NYS Department of State

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