S Corp Annual Report: Everything You Need to Know
An S-corp annual report details an S-corporation's activities during the previous year. 3 min read
2. Understanding Annual Reports
3. The Purpose of Annual Reports
4. Understanding Franchise Taxes
5. When Are They Due?
6. Business and Financial Annual Reports
An S-corp annual report details an S-corporation's activities during the previous year. S-corporations and other companies must file an annual report each year on the state level, typically through the Secretary of State's office in their state.
These annual reports keep the state apprised of information such as a corporation's address, as well as the identity and addresses of its registered agent and directors or managing members. The exact requirements vary by state.
Understanding Business Annual Report & Franchise Tax Obligations
If you are starting a business, you may not have considered annual reports or franchise taxes. These can come as a surprise to existing business owners as well. Whether you are an S-corporation, a C-corporation, an LLC, a nonprofit corporation, or an LLP, these two ongoing costs will be paid yearly throughout the lifespan of your business. When you understand your annual report and tax obligations, you can plan more effectively and take informed action.
Understanding Annual Reports
Once you incorporate your business, you will need to file an annual report with your Secretary of State. If you have not prepared an annual report before, here is what you should know:
- Your annual report will include all of your corporation's activities conducted during the previous year.
- The information required will vary from state to state.
- The most commonly requested information includes (but is not limited to) the principal business address; the names/addresses of directors, officers, members, and/or managers; and the number of shares the corporation has issued.
- Fees will also vary from state to state but generally range from $50 up to $400. In some cases, there are zero fees.
Please note: If you are a sole proprietor or part of a partnership, you do not typically need to file an annual report.
The Purpose of Annual Reports
Depending on where you are located, you may have to file a biennial report instead of an annual report. This means that certain states require corporations to file every other year. Regardless of which model your state follows, the purpose remains the same. Annual/biennial report fees are a consistent revenue stream for the state.
This report is also submitted for data purposes. Within a year, a lot can change. A corporation may have moved locations or changed management. This is the type of information that is collected and stored by the state.
Understanding Franchise Taxes
Although misleading, franchise taxes are not an extra tax that is applied to franchise businesses. Instead, it is a tax that that must be paid in order to be incorporated or registered within that specific state. Depending on the state, this tax will be calculated based on various factors, such as the following:
- Business income
- Business assets
- The number of shares
- A combination of the above variables
In other cases, this tax is a flat fee.
When Are They Due?
In terms of deadlines, both your annual report and franchise taxes will need to be submitted based on your state's guidelines.
- Some states will require you to file and pay by a predetermined date. In other cases, due dates are associated with the anniversary date of formation.
- In some states, due dates will also differ based on the type of corporation. For example, an S-corporation may have a different due date than an LLC.
- You can generally file an annual report through your state's website. If you fail to do so, the consequences can be severe.
Business and Financial Annual Reports
In addition to your annual report, you may need to produce business reports for investors, directors, or stakeholders. Although finances tend to be the core component of a business annual report, you may also need to include the following:
- A balance sheet, including data on all liabilities, assets, etc.
- Profit and loss, which includes all income, expenses, outgoings, revenue, and profits
- Shares and stocks, including the volume and value of issued stocks
- Financial forecasts, which are projected profits
When you are filing a formal annual report, please be fully aware of what is required. Plan ahead to ensure that everything is filed and processed on time. If it is your first time filing, it is recommended that you seek a professional opinion prior to submission.
If you need help with your S-corporation annual report (or an annual report associated with other types of incorporation), you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.