LLC Principals – Don’t Forget Your Annual Statement!

Nellie Akalp

In my last post, I advised real estate investors to keep their LLC in good standing by keeping a sharp line between their personal and business finances. There's another important step for LLC compliance — and that's your Annual Statement/Annual Report.

When it comes to paperwork, the LLC is far less onerous than the C Corporation or S Corporation.

However, most states do require every LLC to fill out an Annual Report (also known as a Statement of Information) with the secretary of state's office. And here's what every real estate investor needs to know about this document:

What is the Annual Report/Annual Statement?

While specific forms vary among states, in essence this report is a way to update the records of the secretary of state. You'll be asked to submit information about your LLC including the name and address of the current registered agent, the LLC's principal business address, the names/addresses of directors and a description of the business activities being conducted.

Is my LLC required to file an Annual Report?

The requirement varies for each state – at present, every state except for Alabama and Ohio requires some form of Annual Report filing.

When is my Annual Report due?

Again, specific schedules and deadlines vary by state. In some cases, you'll be required to file:

• Once a year on the anniversary date of your LLC formation (and certain states just require a filing every other year)
• Once a year around your tax filing time
• Once a year around the end of the calendar year

To find out your state's schedule, check with your state's secretary of state office, your attorney, or your legal document filing service.

What happens if I don't file an Annual Report?

If your LLC fails to submit the required paperwork in a timely manner, you may end up paying penalties and late fees to your state. In the worst case, your LLC may also be subject to suspension, even dissolution.

Be sure to know your deadlines and get your paperwork in on time. It's a relatively easy task — and will help ensure your LLC remains in compliance and continues to shield your personal assets.