Running a remote business in the US can be challenging. Among other things, there are many legal and administrative tasks to handle. Filing an annual report is one of them. Plus it’s super important to stay compliant with the US regulations.
If you’re doing this whole process by yourself, then it’s important to stay on top of things. You might also want to consider hiring a professional to help you somewhere on the road.
Either way, you’ll need some guidance, on – what is an annual report for US LLC.
Annual Reports for US LLCs: The Basics
What is an Annual Report?
If we go by definition: An Annual Report is a document that every company must file with the Secretary of State (in the state where it has been incorporated) to tell the state that it will continue to exist.
To simplify it, you can think of it as a renewal of the company. It typically includes information such as the company’s address, names of members/managers, and in some states financial statements.
Who Needs to File an Annual Report?
With only a few exceptions, every US state requires LLCs to file an annual report once a year.
Whether your LLC is actively conducting business or you have no transactions at all, filing this report is mandatory if you want to keep your company active. Failure to do so can result in penalties, fines, or even the dissolution of your LLC.
In Wyoming, where we incorporate our clients’ LLCs, not filing an annual report will first make the company inactive. If you don’t file the annual report within 60 days, the Secretary of State will put the company into administrative dissolution, which means closing it down.
Learn more about how to submit an annual report, from our article dedicated to this topic.
What Information is Included in an Annual Report?
An Annual Report typically contains essential information about your LLC‘s activities and structure. This information may vary slightly depending on state requirements, but commonly includes:
– Business Information: Such as the LLC’s legal name, address, and registered agent details.
– Ownership Details: Names and addresses of members or managers, and their ownership percentages.
– Financial Information: Some states may require financial statements or a statement of assets and liabilities.
– Business Activities: Description of the LLC’s activities and any changes since the last report.
In Wyoming, all that is required is the details about the company, such as name, address, etc, along with some basic financial information. The financial information determines the state taxes that should be paid and is kept confidential.
Where and When to File an Annual Report?
Besides the question of what is an annual report, where and when are also important questions for your US LLC.
The filing requirements for Annual Reports vary depending on the state in which your LLC is registered. Typically, Annual Reports are filed with the Secretary of State’s office or a similar state agency responsible for business entities. The specific deadlines for filing can also differ by state, ranging from annually to biennially.
To avoid late fees or penalties, it’s crucial to know your state’s filing deadlines and requirements. Some states may even offer online filing options to streamline the process for LLC owners.
In Wyoming, the annual report is due each year on the first day of the month when your company has been registered with the state. If your company was registered on 12 September 2021, you need to file the annual report by 1 September each following year. If you started your company on 5 March 2023, you need to file the annual report by 1 March every year. You can file the annual report within the last 90 days of the due date.
Delaware, on the other hand, requires filing the annual report for LLCs along with the franchise tax by 1 June each year. Every state has its own rules.
Importance of Annual Reports for US LLCs
We understand that as a business owner, you are juggling many responsibilities, and repetitive tasks at some point may start to look all the same.
Filing an Annual Report it’s just the right example. It may seem like just another administrative task, yet it holds significant importance for the health and credibility of your US LLC.
Let’s cut through the noise and see why Annual Reports are crucial:
Compliance with State Regulations
Most states have a law that says LLCs must keep Annual Reports up-to-date to stay in good standing.
Submitting your report on time = your LLC’s compliance with state regulations.
Failure to comply can lead to penalties, fines, or even the involuntary dissolution of your LLC.
Maintaining Good Standing Status
Timing is everything when filing to maintain your LLC’s good standing with the state.
Good standing indicates that your business is actively engaged in complying with state laws and regulations. It also assures customers, vendors, and partners of your credibility and reliability as a business entity.
Transparency and Accountability
Note: This is not applicable to states providing privacy to LLC owners, such as Wyoming, Delaware, or New Mexico.
In some states, though, Annual Reports provide transparency into your LLC’s financial and operational activities.
With transparency of key information such as ownership structure, business address, and financial performance, you build trust with stakeholders, including investors, creditors, and customers.
Also, transparency fosters accountability and helps mitigate potential conflicts or misunderstandings.
Legal Protection for Members
Filing Annual Reports shows your LLC’s compliance with state laws, which can provide legal protection for members.
Let’s see it this way – on your entrepreneurial journey, you will face different situations, and sometimes different situations can mean: disagreements, or lawsuits. In these kinds of situations having a record of timely and accurate filings can support your LLC’s defense.
Additionally, maintaining good standing can enhance your LLC’s eligibility for legal protections, such as limited liability for members.
Starting a US LLC as a Foreigner
Setting up a US LLC as a foreigner opens new business opportunities in the United States. There are, however, a lot of legal and administrative requirements.
This journey can be done in two ways. The first one is to do it all by yourself, or the second one – you can give your trust to professionals to complete the whole process for you.
Feel free to check out the Neubase packages, and learn more about the process.
Of course, this is a process and it takes time to make the best decision. Start by reading this shortcut to a better understanding of the US LLC formation process.
Legal Requirements for Foreigners Establishing a US LLC
Foreign entrepreneurs can legally establish and own an LLC in the United States. However, there are specific requirements to fulfill.
These include appointing a registered agent with a physical address in the chosen state, obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and complying with state regulations for foreign-owned businesses.
Again, we already prepared a dedicated guide that covers everything important to EIN.
Choosing the Right State for Your LLC
Selecting the appropriate state for your LLC is a strategic decision that can impact taxation, regulations, and business opportunities. Delaware and Wyoming are popular choices due to their favorable business laws and tax benefits.
However, factors such as industry focus, proximity to markets, and administrative ease should also be considered when making this decision.
If you are wondering about the difference between Wyoming vs. Delaware, learn more from this article.
Hiring Registered Agents and Legal Counsel
A registered agent and legal counsel who knows US business laws can make LLC formation easier.
Registered agents serve as official representatives for receiving legal documents and notifications on behalf of the LLC. On the other hand, legal counsel can provide invaluable guidance on compliance, tax implications, and ongoing legal obligations.
Partnering with experienced professionals can reduce risks and ensure compliance with US regulations throughout the LLC lifecycle.
Check out our dedicated article about the importance of Registered Agents.
Understanding Tax Implications for Foreign-Owned LLCs
Foreign-owned LLCs are subject to US federal and state taxation, as well as potential tax obligations in their home countries.
It’s important to understand the taxes that apply to your LLC, such as income tax, sales tax, and withholding tax. Talking to a tax advisor who knows about international taxes can help you make a tax plan that lowers your tax bill.
Non-US entrepreneurs can maximize profitability and stay in compliance with tax laws by navigating taxation complexities.
Starting a US LLC as a foreigner is an awesome opportunity for global expansion and access to the global market. However, establishing a strong foundation for remote companies requires a deeper understanding of all key points that are part of the journey.
Read the ultimate guide dedicated to US LLC taxation for non-US residents.
The Neubase Process
As we mentioned, this journey can be done all by yourself, or you can be part of our growing business community by starting your remote company with the Neubase process.
At the end of this article, there is a guide that you can download and learn more about.
Conclusion
For non-US residents, the complex landscape of US business regulations can be overwhelming. However, with the right knowledge and guidance, establishing and maintaining a US LLC is achievable.
When it comes to answering the question, of what is an Annual Report – we can start by saying that it plays an essential role in the ongoing compliance and transparency of your LLC.
They provide a snapshot of your business’s financial health and operational activities, ensuring adherence to state regulations and maintaining your LLC’s good standing.
Whether you choose to go on this journey on your own, or by choosing professionals to your side, make sure you understand everything well.
Because, a better understanding of regulations and laws means a strong foundation. And business foundation leads to growth.
You can always count on Neubase’s support, and a free ‘1-on-1’ consultation with Petar is just one click away.
