Our guest blogger is Jacqueline Bruno, a Paralegal at The Legal Department.
If you are a business owner, you know that each year you must follow certain steps to maintain your business’ annual governance and keep its liability shield in place. How does filing an Annual Report each year keep your liability shield in place? It tells the State of Florida you are maintaining regulatory compliance for your business entity, which keeps the entity in good standing and protects you personally from the obligations of the entity.
The purpose of filing your Annual Report each year is to fulfill your legal obligation to keep all information kept by the state current and up to date. Regardless of if you have changes to report, you still must file, and failure to do so puts your personal liability at risk. The Annual Report is to be filed electronically on sunbiz.org and is due each year between January 1st and May 1st. The Florida Division of Corporations sends out reminder emails in January or February giving instructions on how to file your report. Even if you do not receive this email, you are still responsible for filing the report. Mark your calendars every year so that this step in regulatory compliance never gets missed.
The cost to file the Annual Report is $150.00 for Corporations and $138.75 for LLCs. If you file after May 1st, there is a $400.00 late fee, this is an expense that can be avoided by filing in a timely manner. When filing your Annual Report, make sure to make all necessary changes before submitting, if additional information needs to be updated after submitting your Annual Report, an Amended Annual Report can be filed at a cost of $50.00 for LLC’s and $61.25 for Corporations.
By the third Friday in September, if your Annual Report has not been filed, the state will administratively dissolve your business entity. A dissolved business entity makes you responsible for all debts and obligations of the business. To reinstate your business after it is dissolved, you will have to pay a reinstatement fee as well as all past due amounts. By filing your Annual Report on time you can avoid these hassles and continue running your business knowing you have fulfilled your legal duties.
After your Annual Report has been filed, it is best practice to at the same time draft your Annual Consent summarizing and approving all actions taken during the past year of business operations. Corporations are required to hold an annual meeting for shareholders and directors, and LLC’s may be required depending on their Operating Agreement, however it is advisable for all Corporations and LLC’s to complete an Annual Consent each year and keep it within their records book.
What is an Annual Consent? It is a “written consent in lieu of a meeting” that takes the place of annual meeting minutes, signed by all the people who would be required to attend an annual meeting, so that an actual meeting does not need to be held. Although the Annual Consent does not get filed anywhere, keeping record of your Annual Consents each year is part of maintaining your business’s annual governance and further solidifies the liability shield protecting you and your business. If trouble ever were to arise, it is better to have these formalities in place proactively instead of getting caught without them. Some of the information to include in your business’ Annual Consent would be any address changes, ownership changes, major purchases or contracts, equipment purchases, new loans or refinancing, bank changes or accounting changes. Once signed by the business’s managers and members for LLCs, or shareholders and directors for Corporations, place your Annual Consent within your business’ records book for safekeeping.
Repeat these steps every year to keep your business in good standing and hold a firm liability shield in place. If you have questions about filing your Annual Report and drafting your Annual Consent, please reach out to us or visit the resources available on sunbiz.org: https://dos.myflorida.com/sunbiz/manage-business/efile/annual-report/instructions/
Information in this journal post is for general informational purposes only. Nothing in this journal post should be taken as legal advice for your individual situation. Viewing of this journal post and/or contacting us does not create an attorney-client relationship. Please do not send confidential information to us until an attorney-client relationship has been established.