The Secret to Success with Annual Reports
By Jennifer K. Mailander, Associate General Counsel and Senior Product Manager
For decades, most states have required corporate entities operating within their borders to file something called an “annual report.” The annual report is a standing obligation between legal entities and the states in which they are qualified to do business – a routine way of providing the jurisdiction with up-to-date information about the company. Filing your annual reports accurately and on time is more than an important formality. It’s critical to maintaining the good standing of your corporate entities.
As corporate documents go, annual reports aren’t especially long or detailed. But they’re still a major administrative headache. Business growth is partly to blame. As companies spread across state lines and begin transacting business in more and more jurisdictions, their compliance obligations, including annual reports, see a corresponding increase in number and complexity. That’s natural.
But external factors have made annual reports trickier than they need to be. Just as each state has its own character, accents, and traditions, each has its own unique compliance requirements. Not only do different states have different names for their annual reports, they also have different standards for what information they must include, what time of year they’re due, how they need to be filed, how they’re paid for, and more.
Consider a scenario: A company with an entity doing business in a dozen states could conceivably face 12 different annual report filing deadlines, 12 distinct sets of data requirements, and 12 different logins for access to the correct state filing and payment sites. And that’s just one entity. Multiply the number by 5, 10, 100, or more, and you begin to get a picture of how complicated annual reports can get.
What’s worse, the recent economic climate has forced many companies to ask their employees to “do more with less.” Compliance officers, assistants to the corporate secretary, paralegals, and other back-office staff members are now assuming responsibilities well beyond the scope of their former roles. They’re managing new functions and new relationships, and under the weight of these burdens the job of remembering deadlines and jurisdictional idiosyncrasies for scores or even hundreds of entities can seem like the proverbial straw that broke the camel’s back.
No matter who is responsible for them – the tax department, compliance office, inside counsel’s office, finance department, etc. – annual reports present a kind of stealth threat to your business: They’re small, they’re easy to overlook, and they’re always trying to sneak past you. But small as they are, you’d better believe they carry significant risks to your company’s status and reputation.
That’s why it’s so important to have a reliable method for tracking and filing annual reports on time and without lapses. To make it easier for you, we’ve put the following information together. In the sections below, we’ll outline the basics of annual reports and the problems they often create, and offer a few common-sense suggestions for keeping all of your entities in good standing.
To download a full copy of CSC’s Annual Reports whitepaper, please click here.