Annual Reports Best Practices: Keep Your Business in Good Standing

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Annie: Hello, everyone, and welcome to today's webinar, "Annual Report Best Practices, Keeping Your Business In Good Standing." So my name is Annie Triboletti. I will be your moderator kicking things off today.

So joining us today are Trent Bavaro and Kevin Eissner. Trent is a director of product management, and Kevin is a client success manager. So with that, I would like to welcome in Trent and Kevin.

Trent: Thank you Annie. Really happy to be here today. Kevin and I have a full slate of information to share about annual report best practices. Looking at the attendee list, there are some names and companies I recognize. There are some that I don't. So whether you're here as a client, a prospect, or just to learn more about annual reports, we're very happy to have you here, and we have a lot of good information to share with you.

The first thing I want to do is just talk a little bit about CSC. We are a world-leading provider of business administration and compliance solutions. We have over 8,000 employees across 5 continents, and we have capabilities in more than 140 jurisdictions. And yes, we are here today to talk about annual reports as part of our corporate and legal solutions business. That also includes things like filing business formations, registrations, amendments, anything to do with your business entity and the life cycle. But we also do that same type of service internationally as well as part of our Global Subsidiary Management.

We have an award-winning entity management system to track your entity portfolio and your data. We do digital brand services, which is enterprise-level domain registration and security monitoring. E-recording with integrations across local recording offices across the country, UCC filing searches, fund administration, and much more. And across these services, more than 90% of the Fortune 500 utilize CSC.

We've been in business for over 125 years through common ownership. And really we are the business behind business. We do all of these complex filings and regulatory compliance in order to help your company maintain its active status to register in any jurisdiction that it's doing business and allow you to focus on what you do best with your clients, your products, and services.

Moving forward, we have a packed agenda for today. We're going to talk briefly about what we're going to cover. The first is annual reports, and we are talking about state-level entity filing obligations to maintain the status of your company in any jurisdiction you are doing business. It's different than the annual report that you may see online or across different brochures, where you have these 10-K forms for publicly traded companies with these big financial graphs and these big narratives tailored towards investors. Here we're talking about statutory compliance, again entity data to make sure you can transact in that particular jurisdiction.

We're also going to do filing reporting deadlines and requirements. We're going to talk about how different entities and different jurisdictions have a different filing cadence and different information needs to be provided to the state. For example, in California, a corporation files every year, a limited liability company every other year. There are a lot of different nuances that are important to understand so you remain compliant and are not late and keep your company in good standing.

Annual report challenges, that's one of them right there. Trying to understand all the differences between jurisdictions. We'll get into that and more. The consequences of not filing an annual report. There could be penalties, taxes, late fees, the potential of your business to be cancelled administratively by the state and then you're no longer able to operate lawfully until you reinstate and all the different obstacles that come with that.

We'll talk about the difference between a business license and the annual report. Oftentimes they are in the same sentence. There are similarities, but there are a lot of differences, and we'll explain all that to you.

Looking ahead to 2026, really important to kind of have your finger on the pulse to understand what is changing, what is not changing, and to be best prepared. Last year, we talked about how Pennsylvania had a filing due every 10 years, and now it's changed to a filing due every year. There are some other big changes coming ahead in 2026. We'll get into that.

And lastly, how can CSC help support you beyond just socializing information, educating you, but other ways we are available to help. And with that, I want to pass it over to Kevin to dig into what is an annual report.

Kevin: Thank you, Trent. All right, so Trent briefly explained an annual report. I'm going to go into a little more detail here. So first and foremost, what is an annual report? As Trent mentioned, an annual report is really a basic compliance filing filed with the secretary of state's office.

Each state has their own version of this report. They typically ask for information such as your principal business address, your officers and directors. Some states ask for stock information, LLCs, you're reporting your members and managers, what I like to call the entity basics. Some states also ask for you to define what type of business you're doing, called the business purpose. Just a few words such as manufacturing, food service, things like that.

A lot of states are basic level filings. Some states they ask for additional information outside of the basics, such as Washington wants to know if you have any real property in the state. New Jersey wants to know if you have employees in the state. If you do, they ask for your workers' compensation policy information.

Some states use the annual report as more of a survey opportunity. An example of that would be West Virginia. They ask if you are a scrap metal dealer. They also ask for your amount of employees in West Virginia and amount of employees in total. Kentucky asks for your county that you transact the most business in, in Kentucky. So states, they do use this. Some states can use it as a survey opportunity.

In addition to the various requirements from state to state, as far as reporting information goes, a lot of them, they all have their own name for them. So a couple examples here on the screen are what certain states call their annual filing. The statement of information is what California calls their filing. As Trent mentioned earlier, LLCs in California file every two years. So they file a statement of information biannually. Corporations, however, file every year. So those filings are basic filings, CEO, CFO, secretary for corporations, business purpose, principal business address. The LLC report, you're reporting your principal business address, members or managers, and your business purpose as well.

The occupational tax report is what Nebraska calls their filing. It's called a tax report because the filing fee is based off property values reported, property values in Nebraska. The annual list is what Nevada calls their filing. On that filing, you are just listing your officers and directors or members and managers.

And then Delaware is called the franchise tax report. Delaware is a special state where there is a franchise tax payment made in conjunction with the Secretary of State annual report. And that filing fee is calculated based on authorized shares. And in some instances, clients can choose to recalculate their tax using the issued shares and gross assets recalculation method.

All right. So now that we have some good information on what is an annual report, I'm going to share some details about when they are due. So just like the names and information requirements vary from state to state, the due dates vary greatly from state to state as well. So here are some examples of how states can calculate your due date. They can be calculated based on the company's fiscal year end, your anniversary month, your anniversary date, or in some instances the state can choose to assign a due date to you.

So an example of a fiscal year end due date would be a corporation registered in Massachusetts. The annual report is due three and a half months after the close of the entity's fiscal year end. So if you were operating on a December year end, your annual report would be due March 15th annually. Tennessee is also an example of a fiscal year end state. When you register in Massachusetts and Tennessee, when you register or qualify in these states, on the initial filing, you are listing your fiscal year end month. So in Tennessee, the annual report is due three months after the close of the entity's fiscal year end. So if you're doing a December year end, your annual report is going to be due March 1st in Tennessee.

Also there's anniversary date. That would be the date you registered in that jurisdiction. And then Arizona is an example of anniversary date. The day you register is the day your annual report is due. In some special instances, this typically applies to older companies that are 50, 60, 70 years old, Arizona as an example, if you registered with the Arizona Corporations Commission prior to 1997, the date (sic) has assigned you a specific due date, and that's when your annual report is due each year. So those are just some examples of the nuances of annual report due dates.

All right. Okay. So now I am going to get into some challenges clients can face when it comes to managing annual report filings. All right. So probably the biggest challenge that I hear clients express, when they come on board with CSC with our report filing service, is just staying on top of the due dates. Just as I mentioned, they vary greatly. Depending on the size of your portfolio, clients may have 10 business registrations, they may have 1,000 business registrations. It all depends on the portfolio size. It all depends on your business scope, where you're registered, what parts of the country you're doing business in.

As I said, Delaware, it's easy to remember. March 1st for corporations, June 1st for LLCs. However, if you're also doing business in Pennsylvania, Virginia, Maryland, those are all other due dates that are sprinkled into your portfolio. It can be hard to keep track of if you are not aware of all the different nuances.

Number two is just the knowledge of filing requirements. Just sitting down to file an annual report can be a challenge without the knowledge. Questions clients ask themselves, first off: How do I complete this filing? Am I completing this online? Am I completing it on paper? If it is a paper filing, what type of signature do I need to get? Do I need to have an ink signature? Will they accept Docusign? How do I pay for my filing? Can I file this online with a credit card? Do I need to mail it in with a check? And how am I going to get confirmation of my filing that it has been accepted? These are all questions that come up with clients when we're assisting. Some clients choose to handle their annual reports internally. These are the kinds of questions we receive for clients trying to do them on their own.

Another challenge with annual reports is just managing relevant entity data. Questions you may ask yourself: Where does my company house all my officer and director information? Who is managing the officer data internally? Typically, annual reports for clients handling them internally, it's a mixture of my legal department handles it, my tax department handles it, or it's a combination of the two. It can be a challenge just tracking down all the relevant data needed to complete the filing.

And also, just as I expressed, all the knowledge of due dates, filing requirements, tracking down information, it can be a big time commitment just to have a team or to have a certain individual handle all these filings. That is why CSC offers a solution to take that off your plate and assist with these complex requirements.

All right. So now we are going to get into an annual report has not been filed by the due date. Now what? So as soon as the annual report due date is missed, in most states, the next day there is a change in status. So that's number one, your loss of good standing status. This also varies from state to state. Some states will just say not in good standing, filing past due, something of that nature. So you will not be in good standing. You will not be able to obtain a good standing certificate at this time.

So say the annual report has not been filed for an extended period of time, the state is eventually going to revoke your registration. So that means you have lost your ability to conduct business in the state as you have not complied with the state's annual report requirement. So the timeline for revocation varies as well. It can be 30 days in some states, 60, 90. Illinois, it's about five and a half months before they revoke you. New York, you can have delinquent reports for 10 years, and they won't administratively revoke you right away. But it varies from state to state.

So now my next couple bullets here, I'm going to get into the impacts of being revoked. So one impact is the loss of exclusive rights to your name. So a lot of states when you qualify, incorporate, form, register, you have to make sure your name is available. And when you go revoked, your name automatically becomes available again. So while you're revoked, another company could come in. Another company who has a similar name as yours, who's been waiting for this name to become available, they could go ahead and register with that name now that it has become available.

As I mentioned before, your inability to obtain a good standing certificate. So good standing certificates are needed for an array of business transactions. Oftentimes, if you're going to open a bank account, the bank wants proof that you are in good standing. So being revoked could impact your ability to open a bank account. A lot of times if you're conducting a sale or a transaction with another business or a government agency, they want to see that your entity is in good standing. If you're revoked, you're not going to be able to obtain that good standing certificate.

Also while you're revoked, you're not going to have the ability to bring a lawsuit. And it's just also going to impact your ability to conduct business. As I kind of mentioned, other state agencies are do review the secretary of state website. Clients can be reviewing your status. They want to conduct business with someone who's in compliance. So it absolutely can compromise your ability to conduct business.

When companies do go to reinstate, most of the time they're going to be subject to penalties and interest, which can vary. In states such as Illinois, the fee is calculated based on the company's paid-in capital. So if the company has a couple million dollars in paid-in capital and they've been revoked for a year, they could look at a couple thousand dollars in penalties when they go to reinstate. Delaware, their penalty accrues monthly. So yes, this is kind of the negative impacts of what happens when an annual report is not filed.

Trent: Thanks, Kevin. That's a lot of great information. And to kind of piggyback off what he's saying, these filings, they are due whether or not you have any update information to provide. It's something that you need to do in order to be compliant in that jurisdiction to continue your operations and to transact lawfully. So it's really important to understand that, in addition to that, in most jurisdictions it's a matter of public record, the status of your company. Basic entity details, whether or not you filed, you're late, that can all be viewed online free of charge on most states' websites. So very important not just for your business operations, but the reputation of your business as well.

And a lot of that has the focus of the 50 U.S. states and the District of Columbia in mind. There are also these types of annual report filing requirements outside of those jurisdictions and outside of the country. Even within the U.S. territories, Guam, Northern Mariana Islands, Puerto Rico, U.S. Virgin Islands, all have an annual filing requirement. Outside the U.S., we often see that there are additional requirements and that penalties can be more severe and the fines higher.

But first looking to our north and Canadian annual report filings, they still have a lot of similarities to the U.S. jurisdictions in terms of cadence, in terms of what information is required and how often they're filed. But we do see differences in whether or not it is a domestic entity in that province or territory or actually provincial. That's really just a way to describe a company registered or formed in one jurisdiction, let's say Ontario, is then registered to do business in another, such as Alberta. That's extra-provincial registration. And you may have different requirements depending on whether it's domestic or extra-provincial registered. We also see other things in Canada from time to time, such as the directors need to be residents of that jurisdiction. A different sort of obstacle you may face, if you're doing business in Quebec, the forms are in French.

So as you move outside the U.S., there are some similarities, but there are going to be more and more differences that you need to be able to understand and to manage. Moving even further outside, looking worldwide, a lot of these filings are tied into the financial and the overall health of the business. And so you'll need more information, and again think even more severe consequences for not filing timely, higher fines. Looking at the British Virgin Islands, as an example, they recently amended their statutes, where if you do not file your filing due each year, you can be struck off the BVI register. In order to then reinstate, you actually have to petition the BVI High Court, which is going to have a lot of very high expenses in terms of attorney fees and kind of going before the magistrate in order to plead your case to be reinstated. So again, we do see these filings in the U.S. We also see them see them outside the U.S. as well.

Now I want to talk about the differences and similarities between a business license and an annual report. And so in a nutshell, annual reports typically state level, the right to transact business in that jurisdiction, basic entity information. It is industry agnostic. Whether or not you provide marketing services or you're a hotel, you have the same form that you need to complete based off of the entity type and the jurisdiction. Business licenses can be at the state and federal level. A lot of times these are more localized, county, city, township filings across 160,000 jurisdictions. So tracking that becomes even more difficult depending on the scope of your business or where you're located.

An annual report is something you need to do, again, to maintain the good standing status of your company. High level, the authority to transact business lawfully within that state. But now looking into the type of business and industry you're in is where you may need additional business licenses. So oftentimes you look at the location or locations of your business, the products or services that you provide, and you need to determine what other government [audio cuts out 00:22:44] need to file in. So it could be department of health, department insurance, your local town, your local city. And again, you could have a company that provides multiple different services, products, or goods, and you could need to file a food license, a liquor license, a hotel has an elevator license.

So you can have multiple licenses across one business. So it does become more complicated for each industry and each business type. And again, that's going to be a distinction between annual reports that we're talking about today and business licenses, which are probably still going to be an additional requirement for your business to operate. But again, that's going to be a little bit more focused and localized specific to what you're doing, as opposed to the high-level form to maintain your status in that particular jurisdiction.

Kevin: Okay. So here we have some insights for the 2026 annual report season. More legislation changes are most likely coming. States are routinely changing their processes for notifications. States are routinely updating their filings. Like I mentioned earlier, Kentucky adding their additional survey-like questions. That was something that just happened in 2025, last year. So we can definitely expect some jurisdictional updates to filing requirements.

Some states will probably change how they're going to send reminders. A lot of states, they're moving to electronic notifications for filing reminders. They send them via email. Ten years ago, a lot of these reminders were still sent through regular mail, via postcard or a letter. Virginia was a primary example of that. We were filing annual reports on paper up until about three or four years ago. So states are always updating.

What we also expect is more legal departments will streamline services with their registered agent provider to start incorporating annual report filings and entity management services, so they have all their needs and services centralized into one bucket and one provider.

Also, as I mentioned earlier, the signature requirements, some states, Illinois as an example, are becoming a little more lenient with signatures on filings. Illinois is an example of that, that used to require wet signatures. It had to be physically signed. But now they are starting to accept Docusign as long as there is a verification page with it.

And probably our biggest update is, speaking of states adding additional requirements, Delaware is now going to ask for the entity's nature of business on the annual franchise tax filings for corporations. So this will just be a code that's just a few words outlining what type of business the company does. And so that is probably our biggest change for 2026 and as far as insights for the next filing year.

Trent: Yeah, that's fantastic, Kevin. Really appreciate you sharing all that with us. And kind of talking about how CSC can help, one of the ways is just educational content like this, sharing with everyone what an annual report is, sort of the complexities, looking ahead to 2026, really having the finger on the pulse in terms of what changes are there and being ahead in terms of making sure you're in the know and can prepare accordingly.

Going back to the Delaware corporation, that's something that was really fast tracked through Delaware this year. There was a bill that was proposed in April. It was passed a couple months later. It came into effect August 1st. All in a span of a few months, they amended the Delaware General Corporation Law, again for Delaware corporations needing to include the nature of the purpose of the business moving forward. If you look at the state's website, it hasn't been updated yet, the user interface. But that is because that usually takes place towards the end of the year. But we do anticipate with that being an amendment to the code, that will go live and that is something that you will need to enter moving forward for your Delaware corporations if you have one. The state has issued there are 19 options. We're unsure at this time if this will be a pick list or how they'll be inserted. But again, something that we're tracking, and we're going to make sure that it is in place for all of our clients as well.

Now other ways we could help you, besides sharing of information, is using our technology and our people and our teams. Clients of CSC, they have 24/7 access to CSCNavigator. That is an online platform with tons of tools available in terms of knowledge and filing requirements as well as your entity portfolio. You can view the states you're registered in, your entity number, deadlines. All that information is integrated with our Good Standing Calendar, oftentimes linked with our Registered Agent service. Again, identifying where you are doing business and what you need to do in order to manage the continued, ongoing compliance for your business in that state.

If you're filing documents, it's indexed by entity. It's right there. You're able to view or retrieve as needed. You have real-time corporate entity status tracking, with integrations with the different states, so that if there is a change in your status or a change in your name, you are alerted. You can look into it and investigate, take remedial action if necessary. And, of course, proactive email reminders to unlimited users, letting you know what is coming due before it becomes due, again in order to manage, track, and file on time.

Now with our Annual Report Preparation and Filing service, as the name suggests, we prepare and file annual reports on your behalf across all of your entities in any jurisdiction it is located. It starts with a complementary audit of your current entity portfolio in every state. We go through, identify this is where you're registered. Are you compliant? Are you past due? Do you have a report coming due very soon? What information is missing? Sometimes we identify that there is an incorrect name. Maybe you filed a name change in your domestic jurisdiction years ago. You forgot to update it in additional jurisdictions you registered. We uncover that. We let you know. We could help remediate and bring your portfolio completely compliant in any jurisdiction you are transacting in.

You also have really the peace of mind with the data and working with a dedicated specialist. Can you imagine working with someone like Kevin? That wealth of knowledge and having a person at the end of an email and a phone number, you could pick up, call them, talk to them, have your questions answered, a dedicated rep. Really having that confidence that you are working with someone that knows the business, that knows annual reports, and will make sure that you are compliant and getting things filed on time, correctly, and efficiently.

Use the system to track your filing deadlines, prepare, and submit your reports. And we also offer different invoice options that fit your accounts payable and your internal workflows as well.

Another benefit is our award-winning Entity Management solution. This is a more robust offering, where you could organize your corporate data, your officers, your directors, authorized signatories in different jurisdictions, who is actually going to be signing the report on behalf of the business, attesting to the information that is being submitted to the state. You could generate reports for auditing purposes, for tracking your portfolio. Do you need to make decisions to consolidate or to expand, provide to your board of directors? All that is information that can be reported on and pulled from the system and utilized by you.

You could also manage your minute book and governance documents electronically. Again, you could track by entity. You could have all those documents stored in the system in one place, using technology built and designed for this purpose. You don't need spreadsheets anymore to track stock and shareholder information and where entries are registered, what the due dates are, all the internal compliance information.

And we also offer organization charts as well. That is really great functionality to determine what the ownership and the subsidiaries are across your different entity portfolio, who the owners are. Are there indirect subsidiaries, indirect owners? Sometimes we see that with annual report filings. We see the beneficial ownership requirements. And it's a way to determine, through the use of technology, something that may take you a long time. It may be subject to errors. This is the system designed and built for that. It gives you calculations, gives you a visual, something that is fantastic to use for you that is also part of our Entity Management product.

With that, I'm going to go ahead and turn it back over to Kevin.

Kevin: All right. So here are just five questions to ask yourself to evaluate your current annual report process.

Number one, what assurances do you have that your organization is in good standing and is not at risk for paying penalties? Number two, what is the process for transitioning annual report filings when the current person changes roles? Number three, what is your back-up plan to file a report on time if the state's website goes down on the due date? Number four, how are you staying on top of your due dates? And number five, how do you manage and keep track of the evidence of the filings? If you are asking yourself any of these questions, why not partner with CSC, a specialist in annual reports, to take annual report filings off your plate and work with a trusted partner?

Some challenges we have seen is a big one, states' websites, especially closer to the due date, they will crash from time to time. You might have a pending deal or something that requires you to be in good standing. You cannot fall out of good standing even for a day. Are you able to get that filing in on paper? Just figuring out another way to complete the filing can be stressful. CSC has knowledge of alternative filing methods when that should be the case. We do strive to file as far ahead in advance of the due dates as possible to avoid any issues with websites crashing or anything like that.

Another big one is if you're asking yourself, "What process do I have for annual reports when someone who's handling them changes roles," does the current person filing the reports, do they have any sort of process documents that they've outlined? Or just things that if there's not a smooth handoff internally, that's another opportunity where CSC can be engaged. If you're not sure how they were being handled internally, partner with us. We can take the filings off your plate.

We've seen email reminders go to clients' emails who are no longer employed at the company, causing filings to be missed. So really, these are a couple good questions to ask yourself. And like I said, if you're really asking yourself any of these questions, CSC is here to help with annual report solution.