By Andrew S. Bennett –
It’s not uncommon for those organizing a business entity to be so focused on getting the ball rolling that they miss the part about routine maintenance. Under Florida law, business entities must submit an “Annual Report” to the Florida Secretary of State each year. Sometimes, business entities are caught off guard when the State requests an Annual Report, or worse, they put off filing the Annual Report for so long, or, simply forget to file altogether, so that the State administratively dissolves the entity. This article will explain Annual Reporting requirements, when, where, and how they are filed, and what happens if an entity fails to file.
What is an Annual Report?
Annual Reports are at times confused with financial statements or earnings reports by which entities report profits and losses. Annual Reports contain no financial information whatsoever. While there is slight variation depending on the entity, and whether or not it’s foreign (i.e. organized under laws of another state) Annual Reports need only contain the following:
1. Name of the entity (foreign entities must also list the state or country of organization)
2. Date of organization (foreign entities must also include the date of admittance to conduct business in Florida)
3. Main office address
4. Mailing address
5. Federal Employer Identification number
6. Name and address of a registered agent
7. Names and business addresses of: directors and principle officers (corporations and not-for-profit corporations), general partners (LP’s and LLLP’s), or managing members or managers (LLC’s).1
Annual Reports can be filed online with the Florida Department of State Division of Corporations at https://services.sunbiz.org/Filings/AnnualReport/FilingStart, and are available to the public at http://www.sunbiz.org/.
Due Dates and Costs:
While the name “Annual Report” denotes the frequency of filing, Annual Reports are actually due between January 1 and May 1 of each calendar year.
The cost of filing depends on the type of entity:
• Corporations: $150
• Not-For-Profit Corporations: $61.25
• Limited Liability Companies: $138.75
• Limited Partnerships: $500
• Limited Liability Limited Partnerships: $500
If a report omits any necessary information, the entity will be notified, and if corrected within 30 days, the report is deemed to be timely filed, even if the 30 days expire after the May 1 filing deadline.
Failure to Timely File:
A $400 late fee applies to all entities, no exceptions, who fail to file by May 1st (except for not-for-profits, which have no late fee). An entity then has from May 2 to the close of business on the fourth Friday in September (just over 4 months) to pay the late fee, and if
1 Florida’s Revised Limited Liability Company Act (which currently applies only to LLC’s formed this year but will apply to all LLC’s in 2015), requires LLC’s to list only 1 person with management authority.
2 The Revised Limited Liability Company Act (which currently applies only to LLC’s formed this year but will apply to all LLC’s in 2015) omits this personal liability language for members and managers.
not, the entity is administratively dissolved and listed as “inactive.” It is possible to have an entity reinstated, but again, it will cost you. The fee schedule for reinstatement is:
• Corporations: $600 plus $150 for every missed Annual Report
• Not-For-Profit Corporations: $175 plus $61.25 for every missed Annual Report
• LLC: $100 plus $138.75 for every missed Annual Report
• Limited Partnership (LP): $500 plus $500 for every missed Annual Report.
While being placed on “inactive” status may seem superficial, severe consequences may follow. Under Florida law an administratively dissolved entity continues to exist only for the specific purpose of winding up its affairs. If a director, officer, or agent of a corporation, or a manager or member of an LLC, knowing of the administrative dissolution, purports to act on behalf of the entity after the fact, he or she becomes personally liable for the resulting debt, obligation, or liability.2 Furthermore, entities who fail to file Annual Reports can be prohibited from maintaining or defending any lawsuit in Florida (except as related to the winding up of the company).
Additionally, when an entity has been dissolved for more than one (1) year, its name becomes available for use once again by the organizers of newly forming entities, thus creating the possibility that an inactive entity will have to reinstate under a different name. If an entity’s name has developed a certain cachet or following in the market place, then preserving the name becomes all the more reason to promptly file. Furthermore, before reinstating under a different name, the Division of Corporations requires that the inactive entity’s original articles of incorporation (corporations and not-for-profits), articles of organization (LLC’s), or certificate of authority (LP or LLLP) reflect the new name, which requires an amendment, which requires (as you may have guessed) another fee ($35 for corporations and not-for-profit corporations, $25 for LLC’s, and $52.50 for LP’s and LLLP’s).
The situation is even worse still for delinquent foreign entities, as the failure to file an Annual Report can be grounds for revoking an entity’s certificate of authority to transact business in the State. Transacting business without a certificate of authority makes the entity liable to the state for all taxes and fees it would have incurred, plus a civil penalty between $500 and $1000, for each year, or part thereof, it transacted business without a certificate of authority.
If only for the sake of the grief to be avoided, much less the time and money to be saved, Annual Reports should be filed on time. If it seems like one more thing to remember, it is, but the Division of Corporations will send an “Annual Report Reminder Notice” to the email address provided when the entity was organized. However, only use this as a backup, as the state will not waive any penalties or late fees. So set your calendar accordingly!
Andrew S. Bennett – Associate
Real Property Law
Education and Honors:
Ave Maria School of Law (J.D., 2013, cum laude)
Senior Editor, Ave Maria Law Review
Regional Champion, 2012 ABA National
Appellate Advocacy Regional Competition
Brigham Young University (B.A., 2010)
Professional Activities and Experience:
Member: Florida Bar Association,
Member: Collier County Bar Association
(Young Lawyers Section)
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