If you’re starting a business, you may be considering forming a limited liability company (LLC). If you do, in most states you need to file an annual report and possibly other documents for your LLC and pay a fee every year or every two years.
An LLC is a business entity that offers liability protection for owners, as well as pass-through taxation, much like a sole proprietorship. To learn more about LLCs, read this Step By Step article.
Renewing Your LLC
Fees and requirements vary by state. Ohio, for example, does not require LLCs to file annual reports. California, on the other hand, requires LLCs to file a Statement of Information every two years and pay an annual tax of $800. You should check with your state for its LLC renewal requirements.
Renewal fees by state range from $50 to $750, and the amount of paperwork you need to file also varies by state.
Most states require an annual report, but it may be called something else in your state, such as an annual certificate, a biennial report, a periodic report, or a franchise tax report. Some states require that you also file a statement of information, which is just a form that lets the state know you’re still doing business.
Whether your LLC has profits or losses, you still need to comply with the renewal requirements of your state. If you do not do so, and do not do it on time, the state can dissolve your LLC. Most states allow you to do your annual filings online.
You need to be sure that you know the deadlines for filing your annual report and other documentation. Some states require that all LLCs file on a specific date, while others require it by the anniversary of your LLC formation.
If you do business in other states, you must register as a foreign LLC in those states and comply with all their annual filing requirements as well. A foreign LLC is simply an LLC doing business in a state other than the one in which it initially registered. For example, if your LLC is registered in Alabama but you are also doing business in Georgia, you need to register a foreign LLC in Georgia.
If you have an LLC in your home state while doing business in other states, you need to register as a foreign LLC in all of the states where you do business. Each state has different rules defining what doing business in their state means. Check with the secretary of state in any states where you do business to see if you qualify as a foreign business.
Generally, you are doing business in another state if:
- You have a physical presence of any kind in that state
- You have employees in that state
- You regularly meet with clients, managers, or investors in that state
- You are licensed to do business in that state
You also may be considered a foreign business if your business has a bank account or property in that state. However, if you are an online business in one state but you happen to make a lot of sales in other states, you are probably not considered a foreign business and are not required to register a foreign LLC.
If you fail to follow your state’s rules regarding annual filings, your LLC may be dissolved by the state, so check with your secretary of state for requirements. If you register as a foreign LLC in other states, you must follow the requirements of all states where you are registered. Make sure you track deadlines for filings and pay all fees and file all reports on time.
If you’re in doubt about your filing requirements, check with a business attorney for more guidance. Step By Step also provides more detailed information on how to start an LLC and the benefits of forming an LLC, along with additional business tips.