What is an annual report?
It is a comprehensive report on a company’s activities throughout the preceding year. They are intended to give shareholders and the state information about the company, including its financial performance.
Filing an annual report is crucial to remain in good standing with the state, and to accurately report company performance to shareholders. In addition to reporting requirements, most states will charge companies a fee to maintain their existence. All US states and jurisdictions have different requirements for annual fees and different due dates for the payments, so it is important to be aware of your state’s specific information. Remember that if you have qualified to do business in more than one state you will require filing reports and paying franchise taxes in all jurisdictions’ where you are officially operating.
Utilizing a company to handle your annual report and tax payments can save you time and money. Most formation companies offer compliance packages that monitor your company in relation to the state of formation and alert you when important payments are due so that you avoid paying late fees and penalties. They will also prepare and file your annual report after receiving the necessary company information, which can save you time and energy so you can focus on running your business.
Doing the bookkeeping for your business is never anyone’s favorite task, but it is an essential part of becoming a business owner. Although it can seem simple it is often more involved than most people realize. If you delay bookkeeping it is easy to run into problems.
AIL recommends starting when things are still slow and you have time to develop a process rather than waiting until you are so busy you don’t have time to figure out if you are doing everything correctly. If you find keeping books is not your strength, connecting with a quality bookkeeping service might be of value to you.
An important aspect of bookkeeping is maintaining a Chart of Accounts. It is the list of places that money can go in your business. Most owners are also familiar with the profit and loss report, which shows income and expenses. All of the line items on that report are accounts in the Chat of Accounts. Less well known is the balance sheet, which shows you things like your bank accounts, loans, credit cards, taxes owed and the amount of equity you have in your business. All those line items are also accounts.
There are many reasons to have you chart of accounts set up properly- the primary one being that it helps you keep your books straight. If all of your income is lumped into one account, you can’t tell what portions of your business are doing well and which aren’t. If you have an office expenses account and an office supplies account, you may have trouble remembering what goes in which and that in turn will make your numbers jump around inconsistently. If you have your Chart of Accounts set up correctly and efficiently, your business bookkeeping can be done correctly.
We recommend using a professional bookkeeping service to manage your books. CapForge offers AIL clients special pricing and packages with many years of experience for small and large business bookkeeping.