With only a few exceptions (for instance, non-profit corporations), entities are required to file an Annual Report with the North Carolina Secretary of State by April 15th and to pay the accompanying fee with their submission. Some business owners may not realize this requirement, while others may be so busy attending to the day-to-day affairs of their business that they forget to do so.
The process to file an Annual Report with the North Carolina Secretary of State is not difficult. Many individuals quickly handle the task themselves online or allow their accountant to do so when preparing their tax returns without ever giving the Report a real thought. MISTAKE! While the form of an Annual Report and the process to submit it are simple, such simplicity should not undermine its importance. An entity’s Annual Report should never be submitted without careful review and consideration first. For example, has the entity’s physical or mailing address changed? Are the officers or managers the same? Is the registered agent still the same individual on record and has that person’s physical or mailing address changed? If the answer to any of these questions is yes, changes must be made to the form, which must then be printed, signed and filed with the North Carolina Secretary of State. In addition, the filing is a good reminder and opportunity to take a look at, have drafted (if not done previously) and discuss the entity’s minutes, records and other legal needs with its corporate counsel.
While the entity caught sleeping will not likely be dissolved immediately, failure to file Annual Reports will eventually result in its administrative dissolution, thus leaving individual owners exposed to personal liability for debts and other wrongs that might occur while the dissolution remains unrectified.