Recorded Webinar: Don’t Be Puzzled By Annual Reports

If you’re puzzled by what annual reports need to be filed for your entity in your jurisdiction, or can’t put the pieces together about the reporting requirements in your state, you could be at risk for missing a deadline that can lead to loss of compliance and penalties.

"Don’t Be Puzzled By Annual Reports" and we will help you put all the annual report pieces into place.

We’ll cover:

  • Annual report preparation and filing obstacles
  • Real-life examples of filing requirements and deadlines
  • An overview of CSC’s Annual Report services
  • And more!

Our services will simplify the management of your annual report filings and help to maintain your entity’s good standing. 

View the recorded webinar here.

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Webinar Transcript*

Anu: Hello, everyone and welcome to today's webinar, "Puzzled by Annual Reports?" My name is Anu Shah and I will . . . joining us today are Scott Matthews and Paula Washburn.

Scott has been with CSC for five years. He is one of the leaders of the Corporate Solutions manager team working with existing clients to maximize their partnership with CSC by providing assistance with important business filings including annual reports. Previously Scott worked with local contractors helping them expand their businesses and establish themselves in their local markets.

Paula has been with CSC for over 30 years. During her tenure, she has managed customer service and fulfillment teams in numerous CSC offices. For the past four years, she has worked as the operations manager of CSC's annual report, preparation and filing team. That is one of the several teams comprising CSC's compliance solution. With that, let's welcome Scott and Paula.

Scott: Hello, everybody.

Paula: Good afternoon. Today we will be providing a comprehensive overview of the annual reports services provided by Corporation Service Company. At the end of our review, we are confident that you will understand topics such as what is an annual report and the consequences of not filing. What are the filing requirements in each state and when are the reports due? During the annual report . . . or excuse me, does the annual report filing also satisfy my business license filing requirement?

Most importantly, we will share with you how CSC can help you reduce your risk and stress by partnering with our compliance team to manage your annual report portfolio.

Scott: . . . overview of the annual reports service and then discuss a few of the challenges our clients face in a little bit more detail. To begin, CSC will conduct an initial audit of your entities and produce a detailed report of our findings. During this process, we will ask for an updated officer and director information and then we will update your entity information in our web-based entity management solution accordingly.

If we discover entities that are not in good standing, CSC can assist you with bringing those entities back to good standing. Then with the service, we will prepare annual filings, submit the documents and advance minimum state fees directly to Secretary of State on your behalf. CSC typically starts this process approximately 45 days prior to the due date. Now, 44 of the states will allow CSC to file it online. However, if a form is required, CSC will obtain the documents to prepare using the information we have on file.

Once completed, we will send over the document for review, approval, and signature. You will be able to track this entire process within the CSC dashboard to see when a document is submitted, pending or completed. Now, keep in mind there are seven states which require additional stock and/or financial information to be included on those annual filings. For these states, CSC will prepare the forms with the information we have on file and then forward them to you for completion, review and of course your approval.

CSC maintains a strong working relationship with the Secretary of State which allows us to assist with the annual report requirements in all 50 states, the District of Columbia, Canada, Guam, the US Virgin Islands, Puerto Rico, Northern Mariana Islands when needed. Also, as a convenience, CSC offers customized invoicing options to best fit your workflow needs. We currently produce individual invoices, summarized formats or e-billing options. Now, once completed, CSC will also provide confirmation once the state has accepted any documents.

Paula: Thanks, Scott. You mentioned easy order tracking. Can you provide more detail into what that means when working with CSC?

Scott: Of course, Paula. CSC's good standing calendar is fully integrated with the annual report prep and file service. This provides our customers with visibility into the CSC managed filings versus your in-house filings, which we'll go into in further detail later, transparency into due dates and when reports are or were filed, status including items that are open, in progress, filed or closed.

Plus, you'll have a great working relationship with your dedicated annual report customer service specialist, who will provide updates on status of filings, automatic email notifications of upcoming filings to keep you informed, plus email notifications from CSC DealRoom results advising of any change in any status of an order.

Paula: It's great how our team and the systems work together with our customers to ensure a seamless and effective partnership. Scott, you mentioned at the start of our presentation that there are various challenges associated with managing an annual report portfolio . . . some more detail here. Scott, can you elaborate further on the various annual report requirements?

Scott: It would be my pleasure. So the biggest challenge most clients tend to face is understanding what actually is an annual report. These filings can have different names depending on the jurisdictions they're filed within. Often times these report names are not always clear and can be misleading as far as the state requirement.

Now, some examples of this are in Nebraska, they call their report an Occupation Tax Report. California uses the term Statement of Information. Nevada calls their report an Annual List, just to name a few of those. And then you have the states like Delaware and Arkansas that refer to their annual filing as a Franchise Tax Return. You can't get much more confusing than that, right, Paula?

Paula: No, Scott. Just based on the few examples you provided, I can understand how it would be difficult to identify and understand the requirements based on the name alone. The names of the reports can really be deceiving. Are there any other states that come to mind that may lead you to believe that the filing requirement is an annual report filing but may not be required or vice versa?

Scott: Now, that's another great question, Paula. In the past few years, we've actually seen an increase in scam notices being sent via paper notifications to our clients. The scam appears to be legitimate, asking for a payment and updated entity information. The notice usually has a title outlining the requirement as an annual minute statement. In most cases, these notices are false and scams and can usually be immediately disregarded. One of the benefits of partnering with CSC is enlisting the help of our annual report experts to help identify when a filing is actually required.

Paula: Thanks, Scott. This is great information to pass along. You mentioned the scam notifications can appear legitimate and make the recipient believe a filing is required. Can you provide us with some more information about how someone would know that they need to file a report?

Scott: Of course. This is another common question we do hear from our clients. If you're registered with the Secretary of State, you may be required to submit an annual or biannual filing. Requirements can vary by the jurisdiction and of course by the entity type. For example, in Arizona, limited liability companies are not required to file an annual report with the Arizona Corporation Commission.

However, corporations are required to file annually. California, for example, requires corporations to file annually. However, LLCs are required to file biannually. Our team of trained professionals can assist you in reviewing the requirements for each of your individual entities.

Paula: It sounds as if the requirements really vary a bit by jurisdiction. Are there any other requirements that come to mind that are required to remain in good standing with the Secretary of State?

Scott: Good question again. Now, some states such as California, Missouri, and Nevada have initial report requirements. The report, which is essentially the first annual report must be submitted within a certain timeframe following the formation or qualification. Some jurisdictions allow 30 days, while others up to 120 days. It is important to understand the requirements as failure to do so will result in a negative status and/or revocation of your entity.

Paula: That's good info to know. I imagine these kinds of requirements can sometimes be difficult to track and then again often missed. It is important to understand the variety of filings the Secretary of State may require. You mentioned a timeframe for filing an annual report. Are there specific timeframes for filing annual reports?

Scott: You better believe it. Much like the requirements listed above, due dates also vary by jurisdiction and entity type. Some states, they base their filing deadlines by anniversary date, anniversary month, fiscal year end. Some jurisdictions pick one date per year where all entities must file.

Now, the due dates can be a moving target. For example, Hawaii provides a quarterly filing window based on the date the entity was qualified. States like Rhode Island and North Dakota base filing due dates on entity type. So states like North Carolina and Kansas, they have varying due dates because of fiscal year end. Other states such as Florida and Georgia set specific filing dates that each entity type must follow annually.

So as your registered agent, the good news is CSC will have your basic entity information already in our entity management solution. This would include your entity name, the formation state, the date, the qualified jurisdictions and qualification dates. This allows us to build a custom customer compliance calendar based on your specific entity data. The good standing calendar is very important as states do not always send these notifications. It's just another way CSC can help you out.

Paula: I imagine these varying due dates can be difficult to manage and maintain, especially with some states changing their notification methods or not sending reminders at all. Now, this is a perfect opportunity . . .

Scott: . . . you're required on annual reports and in some cases there can be little. So typically the reports require what we consider basic entity data. This includes your principal office address, a list of officers and directors, the addresses for officers and directors, a general purpose and of course, a signer. Some jurisdictions may also require current financial information including but not limited to authorized and issue shares, par value and paid in capital.

For example, Illinois requires the previous year paid in capital in stock information as well as current data. The state also requests revenue inside and outside of the state in addition to basic entity data. Now, Colorado, they're the extreme example of the opposite spectrum of what a state requires. All they require is the principal office of the address, the principal office address, excuse me, and the signer information.

Now, it's important to note that some states have more challenging requirements. Arizona requests disclosure information, which includes if any of the officers or directors have filed for bankruptcy. This disclosure information must be included annually.

Then for LLCs in Massachusetts, you must provide the name of the individual or individuals who can sign on behalf of real property. It is imperative that the information be accurate as this information could be referenced during a real estate deal if the signing individual is not listed on the report. The real estate deal could be rejected or even placed on hold.

Paula: That's good information. It's important to understand that annual reports are used by other reporting agencies for a variety of reasons. I'm aware of an example where an individual was not listed as an officer on an annual report and was unable to open a bank account. The report had to be amended and due to the state's turnaround time, it took ten days to resolve.

Scott: You're absolutely right, Paula. Now, it's not only important to file on time, but with the accurate information. An annual report fulfills a statutory requirement but is also key for situations like we mentioned above. It can be also used as a reference for business license filings. I would like to ask our audience an additional question, if you don't mind. Now, as it relates to the current . . . well, if a filing is not completed, most jurisdictions will change the entity status from good standing or active, in some states into what is called not good standing status.

The duration between the change in status, now that's going to depend on the different jurisdictions. Some jurisdictions, they're going provide you a few months to return the entity to good status. However, some jurisdictions may only allow a few weeks from the day the annual filing is due. Now, typically when this occurs, the entity is unable to obtain a good standing certificate.

Now, please note, jurisdictions can also revoke the entity's authority to conduct business. When this occurs, an entity can lose the right to its name and some states require a reinstatement and others require the entity to be requalified entirely. This can be very time consuming. It can also be very costly. Reinstating can cause issues with tax clearances as well, plus cost you other money on your bottom line.

Now, other challenges include the late fees, which include your penalties and your interests associated with missed filings. For example, in Wyoming, if your entity, you miss a filing and your entity becomes revoked, there could possibly be a $5,000 fee just to reinstate. Essentially, your ability to conduct business is compromised as you have lost your good standing in that jurisdiction.

Paula: Scott, these examples certainly emphasize the importance of timely filing and understanding why it's so important to file your annual report. Could you confirm if fulfilling the annual report requirement will also fulfill the business license requirement in the jurisdiction?

Scott: Yes. I can definitely touch base on that. Now, before we dive into whether or not one does, it's very key to know the difference between the two. So in an annual report, that's typically required for companies that are registered with the Secretary of State. These entity filings recur to maintain their good standing within the state.

Now, business licenses, that can be based on a variety of factors including the business or the industry that you're in. Now, almost all companies must maintain some type of licensing. It might be required at the federal, the state, the county or the local municipality level.

Right now, there are actively 160,000-plus licensing authorities in the US alone from the Department of Insurance, the Department of Health to the City of New York, you name it, it probably has a license. You may be required to have multiple licenses from different licensing authorities depending on your nature of business as well. The great news here is CSC does offer a business license service as well and we can help you with your additional filing requirements for those if you have questions.

Paula: That is great to know that CSC can offer assistance with business license requirements as well. With the variety of jurisdictions, it's easy to assume the requirements are difficult to manage. You did mention some business licenses are filed with the state. You also mentioned annual reports are filed with the state. Are there any states that allow you to file together?

Scott: Now, most states do require separate filings for their annual report and the business licenses. However, as all things, there are exceptions, in this case, Nevada, where filing your business license in conjunction with your annual list is a filing requirement unless the entity is exempt. The annual report team can help you with the filing requirement and will not only send a copy of the business license to you for your records, but also we'll maintain a copy as well in the CSC dashboard for your convenience.

Paula: Well, that's great to know. The information you have provided thus far has been very, very informative. Can you summarize the reasons why outsourcing to CSC can help our listeners with their annual report portfolios?

Scott: It would be my pleasure. Now, in my experience, I've heard quite a few bit of feedback regarding our service and seen many benefits first hand from dealing with multiple clients. To summarize some of the big benefits . . . well, many states no longer send those annual report notifications. So CSC can keep track of those due dates on your behalf. You no longer have to worry about the research and identifying what requirements and when they're due.

For example, in some jurisdictions right now, the due date for the filing falls on a weekend. Some jurisdictions allow the extension to go through that Monday. Others, well, they require to be completed and postmarked by that Friday before the due date. Now, this is incredibly important for tax filing season as we're approaching it.

Now, this April alone, three major due dates fall on the weekend. You can stop keeping track of the states that now accept electronic filing and which ones require paper filing. You'll avoid paying any reinstatement fees, penalties, interest and even cutting the checks or mailing them out, those costs add up over time as well.

You can save time, money and resources while reducing the risk of missed and lost filings and losing your good standing. You no longer have to manage your usernames and passwords for every different Secretary of State site. CSC receives and reviews all compliance mail notice to us from the Secretary of State on your behalf. So we're already notified about it.

Plus, we provide 24/7 visibility in regards to your good standing events through the good standing calendar and corporate tracker. You can view the status of your CSC managed filings as well as track and update the status of any in-house filings you're maintaining. We store the copies of all your filed reports for your reference in the entity documentation integration folder. And we can take the stress of your compliance needs by managing your annual report portfolio.

Our team of specialists are top notch and they're dedicated to the annual report filing service. Collectively right now, our team has over 135 years of experience. And we currently manage more than 200,000 filings per year. Our state of the art database coupled with our entity management solution and strong working relationships from each of our jurisdictions allow our annual report team to maintain your entity data and manage your filing due dates efficiently and effectively.

Paula: Thanks, Scott, for that great summary. It really does sound like there are many, many benefits to outsourcing to CSC.

Anu: So I just want to thank you, Scott and Paula again. The information is extremely informative. Folks, that is all the time we have today. If we didn't get to your question, we will contact you with a response after the webinar. Reminder that you can download resources from the widget. We want to thank you for joining us and we hope to see you next time.