Why Does Your Company Have to File an Annual Report Every Year and What Happens if You Don’t File?

By: Kelly Mackay

The Secretary of State requires each company organized or incorporated within the State of North Carolina to file an Annual Report as a means of keeping the Secretary of State updated with registered agents, addresses, officers, directors, members and managers.  For corporations, the filing fee per year is $25.00.  For limited liability companies, the filing fee per year is $200.00.  The Reports may be mailed in with a check or submitted online with a credit card and a $2.00 online filing fee. The process is very streamlined.  If nothing has changed since the prior year, you can mark the box at the top of the form indicating that no change has occurred.

It is especially important to make necessary changes to addresses and registered agents on the Annual Report so that the Secretary of State may notify your company of issues surrounding any filing and of the filing of any lawsuit naming your company as a party which has been served upon the Secretary of State on your company’s behalf.  If the Secretary of State cannot find your company because the address has not been updated, you run the risk of not knowing that such a lawsuit has been filed and the need to defend the same.

If you do not timely file the Annual Report, the Secretary of State can administratively dissolve your company.  As a practical matter, this process is generally not initiated until well over a year after a filing has become delinquent; however, the statutes do not include any such grace period.  If your company is administratively dissolved, your company is no longer in good standing with the State, though it may still be sued.  If your company is no longer in good standing, company business may be slowed down because potential creditors or buyers may refuse to do business with a company that is not in good standing.  Once a company has been dissolved, the statutes require that the company’s business be “wound up” so that the company may be terminated.  Since this is unlikely to be your desired result, it is important to timely file the Annual Reports so that an administrative dissolution does not occur.  If an administrative dissolution does occur, you must file the delinquent Annual Report(s) as well as an Application to Reinstate with the Secretary of State, which carries a filing fee as well.

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