Recorded Webinar - Maintaining Good Standing: The Best Way to File Annual Reports

Maintaining Good Standing: The Best Way to File Annual Reports

Please be advised that these free recorded webinar presentations have been edited from the original format (which might include a poll, product demonstration, and question-and-answer session). To set up a live demo, please complete the form to the right.

We know that self-managing annual report preparation and filing across multiple jurisdictions comes with significant risk, but it doesn’t have to be that hard. CSC can keep you in compliance year-round.

Join us for a free webinar, “Maintaining Good Standing: The Best Way to File Annual Reports,” to discover how CSC’s Annual Report Preparation and Filing service can help. We’ll discuss:

  • Common challenges with annual reports
  • Real life examples of annual report filings and due dates
  • And much more!

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Webinar Transcript Coming Soon


Annie: Hello, everyone and welcome to today's webinar, "Maintaining Good Standing: The Best Way to File Annual Reports." My name is Annie Triboletti, and I will be your moderator. Joining us today are Scott Matthews and Lauren Marshall. Scott is one of the leaders of the Corporate Solutions Manager team based in CSC's Wilmington, Delaware office, working with existing clients to maximize their partnership with CSC by providing assistance with important business filings including annual reports. Scott's experience extends from startups to Fortune 500 clients.

Lauren has been with CSC for over four years and is currently the corporate trainer on the Annual Reports Service team. Lauren focuses on training all new team members as well as providing continuing education to ensure the team stays current on the most up-to-date state requirements. And with that, let's welcome Scott and Lauren.

Scott: Thank you very kindly, Annie, for helping us out today with our webinar. I'm Scott Matthews as Annie has mentioned and I am joined with the brains of this operation, Lauren Marshall. And before we dive into annual reports, talking about some of the things we're seeing out there with annual reports and kind of diving into why they're important, what we need to worry about, I wanted to quickly, and make sure everyone's familiar with CSC. I know some of you on the line may currently be working with CSC. We do appreciate that.

And for those who are not as familiar with us, we are headquartered here in Wilmington, Delaware and we currently do work with 180,000 plus clients, 10,000 plus different law firms, 3,000 different financial institutions, and 60% of the best global brands out there for their domains and digital needs. That is all supported by our group of really what makes CSC, CSC the 2,500 employees who work here and make sure that we are, you know, providing you guys the resources, the partnership, and, you know, everything you guys need as a client.

So, to kick off into our subject and kind of give a brief overview of what we are going to discuss today. First, we're going to go over, what is an annual report? An annual report has many different names. We're going to discuss some of those, and you know, kind of talk, you know about what the purpose of those are and why they are very important. We're also going to dive into the filing reporting deadlines. These are very tricky things for clients to keep a hold of, and kind of get an idea of when they're due. We're going to talk about some of the different ways that CSC can help clients and also kind of understand how you're handling it today.

Throughout the webinar we'll be sending out some poll questions to try to make it as interactive as possible. This is really the beginning of the conversation. You know, we hope to have further conversations after the webinar to kind of answer more questions. Next, we'll go into the filing requirements at the various states. You know, they are very different from state to state, jurisdiction to jurisdiction. The consequences if you fail to do a filing which are, you know, there are a lot of different consequences that you could be facing from monetary to loss of good standing to a lot more. So, we'll go into those.

Business license versus annual report, this is a huge topic that we typically discuss with clients because there's a lot of confusion, what is which. We will talk in the great detail about that, and the reasons that you should potentially partner with CSC for your annual report filings.

A lot of clients utilize it. It's one of our most popular services. It really complements the registered agent service nicely and provides you as a client with the peace of mind that things are taken care of. So, we'll go into some of those benefits as well.

So, as I mentioned, the brains of this operation is Lauren. So, Lauren, I'm going to bring in here and kind of start about what is an annual report? Would you mind sharing with our audience today what that is?

Lauren: Great. Sure. Thank you, Scott. So, what is an annual report? An annual report is secretary of state requirement for all companies to maintain the good standing. They have to list their officers, the directors. LLCs have lists the members or managers, as well as the business purpose, and their business address.

So, many states actually call annual reports by a few different names. The first name you see is the statement of information which is also called the SOI form, and that is California's wording for annual reports. Sometimes they call it occupational tax report. That is what Nebraska actually calls this. Now, it is an annual report, we are not asking for occupational tax information. That is just their verbiage. States like Nevada call it an annual list. Arizona will call it a annual report as well as their certificate of disclosure which asks for some specific information. They want to know the date your officers took business, the dates that you guys filed for stock information.

And then my personal favorite is the Delaware annual report is called the franchise tax report. Now, that's something confused with a franchise tax return. While Delaware does ask for some financial information as well as your issued shares, it is actually not a tax return.

Scott: That can be really confusing for a client trying to keep track of the various names. I mean, I would imagine it would also create confusion internally on who would be managing it because a tax to me sounds like it should go to my tax department where, you know, an annual report because of it's, you know, kind of tied in with my secretary of state, my qualification, my legal side of things, it might go to a legal department. Do you hear there's a lot of different places in-house that are kind of handling that?

Lauren: Yes, definitely. A lot of times you'll have maybe the office manager is the one who handles the annual reports while the personal property tax returns might go to that tax team to assist with it.

Scott: Excellent. So, we know that the annual reports have a thousand different names. Okay, maybe not a thousand but plenty of different names. But they also have a lot of different due dates like, you know, it would probably easiest if they could all be due on, you know, the same exact date but that's not the case, is it?

Lauren: Well, we're glad they're not the same day because then we never sleep. The states have varying due dates. Some jurisdictions have . . . annual report is due based off your fiscal year end. For example, Alabama, if you are a fiscal year end is 12-31, your annual report for a C-corp. is due three and a half months after fiscal year end, while your S-corp. is four and a half months. And now that was a change from last year as you just went through.

Some states have your anniversary month. For example, you have Illinois, your anniversary if you qualify to do business in December, you actually have to file a report the last day of November. So, you have to file prior to your anniversary month.

Now, some states as well as, let's see, New York and Colorado, their actual due date is the anniversary date. So, if you qualify to do business on January 12th, your report will be due on January 12th every single year.

And in some states just pick a day. For example we have Florida, Florida reports are due every May 1st. Connecticut LLCs change within the past year as well. They used to be an anniversary month filing, but now you have to file these on March 1st for every single LLC. That was a big change.

Scott: Wow. That's confusing enough. And you mentioned that, you know, some states change. This can frequently happen?

Lauren: Yup.

Scott: Or this happen often?

Lauren: It happens all times. A lot of states will change the requirements, will change their due dates. The Alabama change which is a little blurb on the website. We are being . . . That's our job to know these dates and these changes. We monitor them and find out. But that's all they had, which is the blurb on website. For the Connecticut change, it was just a postcard which could be easily misplaced. If you're a large corporation, you have a big mailroom. Someone might easily just thrown it away.

Scott: I hate to think about how much money a company loses over a three by five postcard. But changes occur which can ultimately lead in you missing annual filling. If I miss an annual filing, you know, wipe my hands clean, no issues, no anything?

Lauren: You wish. So, many times of you are missing a filing, you are going to get large late fees. For example, Delaware LLCs, if you are one minute past due, past midnight, you're initially hit with a $200 fine, as well as any interest that's going to occur which will be 1.5% every single month that you do not file that report.

Illinois, you can assess additional late fees. And Illinois is actually more of a financial information when you have that annual report. So, your report can go up to 20 say 15, a lot of extra fees there. Traditionally have five and a half months to file that reports. As I mentioned, your report is due for Illinois the day prior to your anniversary month. So, if you don't file it that day, it is considered one-month late. You've got to tack on that interest right away. And if you have a large fine fee, you'll be using $20,000 and $30,000, you have that interest instantly on that too.

Wyoming is one as well. Wyoming, if you don't file your report in one year, you have to reinstate. You'll get revoked pretty fast. I have seen companies go up to $10,000 sometimes $20,000 to reinstate, again, based off of their financials.

Missouri is a state as well as Tennessee, you actually have to get a tax clearance from the Department of Revenue. I've seen it go from a few months up to a year, year-and-a-half to get that tax clearance, depending on a bunch of variables. That can be a really big downfall.

And I think the worst is going to be Utah. If you did not realize you had to file your annual report, and you've missed it for a few years, you will actually lose your name. You have to re-qualify in the jurisdiction like a brand new business. Someone might have already taken your name. If you have a very common or a popular name, it could be gone. You'd have to do business under a different name.

Scott: Wow. I mean, just a small amount of what could potentially happen. I mean, just thinking in Wyoming for example, the $10,000 potential of a fine. I mean, no company plans that. No company has that sitting in their back pocket waiting to pay. You know, I can only imagine the nightmare scenarios that we're not even noticing out there. So, we talked about the monetary issues of losing here, you know, missing a filing. What are some other issues that could potentially affect the client by missing some filing?

Lauren: Sure. So, obviously the two worst ones, your loss of your good standing and being revoked in a jurisdiction. So, if you are not active, if you've lost your good standing even revoked, you can't obtain a certificate of good standing. For example, if you want to qualify to do business in another state and you're not in good standing, you cannot get that. The state will not issue a certificate of good standing because you're essentially not in good standing. In that aspect you can't open a new company on their jurisdiction. You can't open a bank account. As we mentioned before in Utah, you can lose your name. You can lose your name and have to qualify under new business. So, obviously things like bringing a lawsuit, you can't do if you're not in good standing either.

Scott: I mean, those are just some of the small things. I know, as an example, I had a client who recently wanted to do a merger and found out that one of the entities that was involved was past due on its filing. They of course found out the morning that the merger was supposed to go through. What this end up causing was a delay to that merger. It got pushed back because they had to bring their entity to good standing because states were not going to allow any additional work until things are nice and cleaned up.

Lauren: And that's a big problem because some states take up to a month to process filings. You have to pay for expediting in Arizona. If you want to try to expedite something in California, it can be a thousand dollars for the same day.

Scott: And at that point, I mean, anyone who's ever worked through a merger knows there's already enough stressful points in there to have to go, "By the way, we've missed the filing and we can't do this today." I would not want to be in that person's shoes.

Lauren: No way.

Scott: But let's also kind of dive into it. So, we talked about the United States. There's obviously a lot of nuances with that. Another place that clients should be aware that we can assist is outside the United States. Now, I'm not going to get into all the details about the global aspect of things because, I mean, when we start talking about different countries around the world, it can get very complex and, you know, please, do keep your eye out because CSC does often do webinars focused about our global subsidiary assistance. What we can do and help provide there. But what we can talk about today is how CSC can assist with the annual reports which are very similar in our U.S. territories and in Canada. Can you give a little detail about what we can do to help out our clients there?

Lauren: Yes, of course. For Canada, CSC is able to assist as well as any other territories around the area. We can assist with Puerto Rico filings. We can assist with Marian [SP] Islands, U.S. Virgin Islands, as well as Guam. With regards to Canada, we can file in all the provinces. As you mentioned we have an international team that can help with that kind of stuff. We are able to go in, pull any forms that are required. We can have them prepared for you and sent to you for signature and completion. And then either email back to us or maybe mail back to us if the province requires an original wet signature. We have people who can go in and read the documents. Often times we get documents that are in French, so someone has to go in and tell us what they say.

Scott: And I know with CSC we typically do provide workable translation to our clients, have an idea of what the paperwork says if they are not an expert in French.

Lauren: Yeah, we do.

Scott: Yeah.

Lauren: We have our American English version handy for you.

Scott: Excellent. That's fantastic. So, yeah, because when we talk about international, again, the same kind of worrisome things that could happen domestically kind of only grow as you move outside the country. And because of the inability to maybe speak the same language, the inability to be on the same time zone, you know, rectifying those situations become far more expensive and far most difficult. So, it just as important to keep your standing outside of the United States as it is inside the United States.

Now, the other thing we always hear is, you know, talking about standing, a good standing, talking about filing is business licenses. Again, we offer plenty of webinars that focus specifically on business licenses in different industries. But often times, there's just one basic question that I hear for most clients. What's the difference between a business license and what's the difference between annual report? How would you best describe that to a client?

Lauren: Oh gosh, we get that question all the time. It is very confusing. Easiest way to describe it is you're annual report as we said before, you are filing it at the secretary state level only. So, in your business license is you are filing in city, county, federal level, so that's very different. For a business license, they file in over a 160,000 jurisdictions, while the annual report is only filed in the 51 jurisdictions. So a little bit smaller. And any of that filed annual reports have to maintain their good standing in the state. So, if you're qualified in that jurisdiction at the secretary state level, you have to file an annual or a biannual report if that's required.

Scott: And I know in some licenses having an annual report is key in order to obtain them.

Lauren: Right.

Scott: Especially for business licenses pertaining to a company as opposed to an individual.

Lauren: Correct. And oftentimes if your company is not in good standing, you cannot obtain that business license. So, our team works often with the business license team hand-in-hand to make sure the company is in good standing that way the business license team can get their business license to that company.

Scott: Well, the good news is, even though the annual report team does not handle the business license. CSC can and we do it all through one platform and one team. So, from their perspective and our client's perspective, it is a nice, you know, uniform team.

Lauren: It's seamless.

Scott: Taking care of everything. Nice and seamless. So, that kind of is a nice segue into why should someone, you know, choose to partner with CSC for their annual reports? You know, we obviously, you know, would love to assist all of our clients with this filing because when you're in good standing, life's good, you're not getting any kind of unexpected things. You know, but what are the number one reasons you talk with clients who have chosen to use CSC? What are some of the reasons that they like and continue to work with CSC?

Lauren: Yes. Number one reason is just this level of service you're going to get from your annual report specialists. Your annual report specialist is just that, specialist in the annual report filings. They know what jurisdictions are looking for, they know the questions, we can rattle off any state and their specific questions pretty much drop of a hat. So, you see them all the time. So, you have that person as your partner. You can go to them for anything that has interpolated questions. They can help you with any kind of filings that way.

A lot of states also don't send notification, so we again, CSC has this built in our knowledge. We know when the reports are coming due based off of the fiscal year-end or maybe your anniversary month. So, if the state doesn't send an email or notice, you're not going to have any way to know your fine is coming due and you might miss it.

Again, changing those due dates, you don't have to worry about that. CSC is going to know that for you and it is our job to know that. Paying those reinstatement fees and late fees, you know, you're not going to have to worry about that. Again, CSC is kind of set it and forget it. We're going to file the reports for you with the information you provided. We might have to reach out every now and then just get a little bit of additional information and some forms might have to know, you know, some additional questions or some financial information, so, please, still have to partner with you in some instances. For the most time you can just rest assured CSC has it for you.

Scott: I mean, from a corporate-level from talking with, you know, CFOs, general counsel, that's really all that our clients really want. And that's . . . from especially, you know, from the executive level down, you know, they want to look down and just know that things are handled so they can focus on the business, that their business is really focused on whether it be engineering, you know, engineering buildings, insurance, you know, whatever it is that they're really hoping to focus on, they don't want to have to spend the time to go, "Hey, do I need to have, you know, this filed or that filed?" Being able to partner with CSC is a great way of doing that.

Now, there's additional benefits that people are going to get. When they come on board with CSC, we don't just, you know, assume everything is working well. We have some checks and balances to make sure that we get off the ground running. You go into some of those details for our client?

Lauren: Yeah, definitely.

Scott: For our listeners.

Lauren: So, once you sent for the annual report service, we have a team that goes through an audit every single company and every single jurisdiction you are and we're confirming that entity is active and in a good standing. Maybe the past, there might be a past due report that we can assist with right away. But it's really going to go into and see every single piece. I call it kind of corporate health check. You don't worry about what we're going to find. We're going to find it for you.

Once again, have that for the service you are to be partnered with a project manager, an annual report specialist who's going to go through your account. So, we're going to hold your hand, walk into the process, get you up and running. If you have past due reports, we're going to get those file for you. If you have coming due reports again, we're going to follow for you. If we have anything that is coming due right away and when you have information, we can do it for you.

Any aren't in good standing. Maybe it has gone into revoke status, we can part with our customer service team give that entities back into the standing. As you mentioned before, some states have or some teams have tax team or company might have tax and that they're going to file something. There are a few states that combine an annual report with a franchise tax return. Anything you want to keep those in-house because they are a franchise tax returns and your tax teams are already handling them. No need to, you know, have some else assist with that if you're already doing it.

Scott: Excellent. So, really CSC is coming in and what we're looking to do is we're helping to simplify the process, streamline the process, and then create the transparency so that the client knows moving forward that everything is going well. And there's proof, there's evidence that shows that to the fact.

Lauren: Yeah, definitely.

Scott: And kind of go off with the benefits of what you get when you come on board. You know, long-term for a client when they're working with CSC, you know, this is where the true marriage of what CSC really is about of service and technology and providing that kind of partnership to our clients. It really comes down to the technology, the 24/7 access to the CSC navigator which becomes a portal where our team passes the information along the information that we complete is sitting there, always out there. You know, they don't even have to call up and get it any time. They can just go right on there online and find a copy of a filing.

Obviously, there's the good standing calendar which all of our clients have today. But if you're utilizing our services, it's nice tracking to see and, you know, just kind of get that peace of mind that, you know, "Oh, Lauren is handling that filing as she said she is. I can see, you know, here's the tracking of that process." Plus there's, you know, hundreds of thousands of other documents in case a client needs to qualified form if something changes in their business.

And then you mentioned a dedicated annual report person. So, sometimes we'll hear a question from clients in attending to the webinar. You know, if I have one person that's CSC coming in to help me, what if that person is not here? What if they get sick? You know, do I have to wait for them to get back? Because my filing, you know, they expect to be done in a certain time.

Lauren: Okay. So, if someone is out the of office, maybe someone is sick or on vacation, your annual report specialist has a backup. We have a buddy. Someone who is monitoring emails, you have their contact information in their email as well as their voicemail, so you can get a hold of them. All emails are on actually forwarded to that buddy, so you should be hearing back from another annual report specialist right away.

Scott: And if for some reason, you know, their annual report specialist who obviously is doing a great job for them, you know, ends up getting promoted into another role, you know, is their training that the client has to worry about doing to that? You know, to their new specialist as they come in?

Lauren: Definitely not. The annual report specialist will go over all the portfolios with the new specialist and give them many kind of information needs to know about. All they have to really worry about is their phone number and a new email address to email.

Scott: And that can't get much simpler. So, we're about to open up the, you know, the floor to some questions. So, please, use that Q&A widget and start filling up with any kind of questions that you might have. But before we open it up for you to ask us questions, we'd like to open this up to ask you some questions and kind of evaluate your current process.

So, the first question we always ask our clients when we're having a conversation about annual reports is, what assurances does your current process provide you? When I say assurances, if for some reason if you partner with CSC and we work on this annual report filings, that's not going to be on our clients. So, that's one of the big assurances that they have, that we take full responsibility.

You know, as we mentioned most clients do not offer and do not have an idea of a budget for missed filings, penalties or things like that. You know, what is your company's current budget for fees, penalties, and others? You ever heard of a company that usually has that set up side?

Scott: No. And then, what is the process for transitioning annual report filings when the current person changes roles? You know, internally we at CSC, we just discussed how it's very seamless for our clients just a new phone number and just an email. In your own companies, I'm sure you have to go through some kind of training if that person leaves and does not provide any information. We've seen nightmare scenarios where people are just finding out about annual reports as they're missed.

Lauren: I've heard that a lot. A lot of times people are . . . left the company, they might have left on unexpected terms, and the filings are on their computer, maybe they were saved on their phone, and they have no idea what's going on, and they're left and kind of a mess and people are . . . it's very stressful.

Scott: We've seen it mergers and acquisitions that happens a lot because unfortunately, you know, companies when they merge, they might, you know, change personnel and it may not have got all the information from the previous person in a role. So, we've seen clients get unnecessary, you know, fines and penalties because they just didn't do their due diligence on them. Again, with CSC, we're here to make sure that transition isn't an issue ever again for your company.

What is your backup plan in the situations that a, you know, you go to file a report in the state's websites down? Now, here you are being on top of your game, thinking you're about to do everything right, but then you go to state of Michigan for example, and what their website's down?

Lauren: I mean, all the time. They have state with large volume, Georgia, Michigan, Florida, they expect you to file your annual report prior to that due date. If you try to file the report maybe a week or a few days before, and it crashes, that's on you. And they open every season up for six months prior, and if you don't file it, that's your own fault.

Scott: And then there's the other aspect of this kind of goes in the next question. How do you keep track of the pin number? So, most states are moving on to, you know, just like everyone wants, the more secure wants to know that. And though I don't think there's many companies out there that would mind if someone else wanted to pay their annual report for them. But they do want to make sure the information associated in those annual reports is kept private and, you know, so they're not sending out pin numbers that are specialized to companies. And just like we talked about how states when they come up with changes, they come out on a three by five little postcard, the pin numbers track through the same way. So, with CSC, when we handle annual reports for a client, how do we keep track of their pin numbers?

Lauren: Yup. So, we work with the states. The Secretary of States did actually send us their large file with all the pins and passwords and we keep them. We have one record we apply them to our orders, so we don't even have to worry about reaching a jurisdiction. Some states, you have to reach out and you might get in a month later. So, if you're trying to file the report on the due date, and you're just now reached out to that pin, you're probably not going to get it until after its past due.

Scott: I've heard many clients in the Michigan area who have Michigan registrations called me two days before, and say, "Hey, I need to file by Michigan annual report. I need the pin number. Do you have it?" We don't. CSC, if we're not handling the annual report filings, we don't have those on the file. Unfortunately, we can't help you, we can ask and request for the state to get it but, as Lauren mentioned, you know, that could take up to a couple weeks, to a month.

Lauren: They're busy. They're processing reports.

Scott: Or you have the choice of trying to wait on hold to try to get it, so that could take way, way too long. I mean, if you've ever called any kind of state service, you know, how long it can take.

But kind of the last question here, how do you manage and keep track of the evidence to these fillings? So again, you know, you might have done filing online, you do everything right, you know, you're on top of your game. The next thing you know you are getting a notification from CSC who monitors your compliance and make sure you're always in good standing anyway. And now we have send you an email it says, "The state has said that you are no longer in good standing." And then you're thinking yourself, "I just paid my annual report. How is this possible?" Well, you put it into a computer that goes to a person who then types in your information. Now, you've had the situation how happen with our own client.

Lauren: Yup. Just happened last week. I had a Virginia report we had filed, the next . . . a week later, so, we got an email from the state thing, this entity is now revoked. And we had evidence with sent file stamp copy, and called the jurisdiction, they said, "Oh, well that's our mistake." And they took the money and applied to their entity. It was back to standing that same morning.

Scott: What did our client have to do in that situation?

Lauren: Nothing. They probably didn't even know about it because it happened so fast. We got the notice, we called the state, and we're already done.

Scott: And that's the kind of, you know, transparent and quick moving process that CSC is here to help create.