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The objective of the annual report is threefold. The annual report keeps the Government informed about all the updates, it communicates about all the modifications or changes, & it keeps the LLC members informed about the necessary taxes and costs. This article has all the information about the Alabama LLC annual report filing in Alabama.
An annual report can be called an address book, as it features all the relevant addresses of the company & the members. This yearly report is a record of all the company’s activities in an entire year. It is also referred to as the Annual Franchise Tax Report because it helps in filing the franchise tax.
Content of the Annual Report
Typically, the annual report filed by an LLC in Alabama (or any other business entity for that matter) will include all the information related to its business & members. The standard contents of the annual report or the annual franchise tax report are
- Office Address of the LLC
- Names & Addresses of the Members & managers.
- Identification Documents
- Social Security numbers of the key members of the LLC
- The objective of the business of the LLC
- List of all the signatories of the LLC
- Information of the registered agent, if any
LLC Tax Update: Before you file your LLC annual report in Alabama, make sure to pay all the tax dues for the year.
Alabama LLC Annual Report
An Annual report is essential for all business types. It authenticates that the information provided to the Secretary of State is accurate & updated. The information provided in the annual report helps the State officials to ensure that all the companies pay taxes. The Alabama Annual Report is filed with the office of the Alabama Secretary of State. Note that the LLC Annual Report is not the same as the Certificate of Compliance in Alabama.
Does the State of Alabama require an Annual Report Filing?
It is mandatory for an LLC to file an Annual Report in the State of Alabama with the Alabama Secretary of State. In addition to LLCs, legal entities such as LLPs & Corporations are bound to file the Annual Report along with the Business Privilege Tax.
How to File an Alabama LLC Annual Report
In Alabama, the Annual report can be filed only by mail. The Annual report is due on April 15 every year. The Alabama Secretary of the State can charge a late filing fee amounting to 10% of the business privilege tax a business owes or $50, whichever is greater.
To file the Annual Report in Alabama by mail, follow the steps below:
- Go to the Alabama Department of Revenue’s Downloadable Forms page.
- Search the Annual Report Form (Form CPT) in the list of forms.
- Download the form (.pdf) on your personal computer.
- Please note that you will require Adobe Reader installed to fill out or edit the form.
- Fill the form with the correct information and save it on your computer.
- Along with this form, Alabama SOS requires an ‘Initial Business Privilege Tax Return’ filing. For that, LLCs need to get the Form BPT-IN, fill it out, and send it to the Department of Revenue.
- Get the print-out of the form and attach the necessary documents.
- Write a paper check with an amount as per the applicable Business Privilege Tax, as per the instructions here!
- Send the printed copies of the forms and documents to the address: Alabama Secretary of State, PO Box 5616, Montgomery, AL 36103-5616
Alabama LLC Annual Report (Domestic & Foreign)
| State Office: | Alabama Secretary of State, PO Box 5616, Montgomery, AL 36103-5616 Links to Website, Forms |
| Due Date: | April 15 every year |
| Filing Fee: | A minimum tax of $100 & the Annual Report Filing Fee of $10 |
| Penalty: | The Alabama Secretary of the State can charge a late filing fee amounting to 10% of the business privilege tax a business owes or $50, whichever is greater. |
| Filing Method: | The Alabama Annual Report can be filed by mail only |
| Forms: | The form to file the Alabama Annual Report can be found here |
| Important Information: | Once the Annual report is filed with the Alabama Secretary of State with the appropriate fees, the process of filing shall be complete. |
Annual Report Deadline
The Alabama Annual Report must be filed by April 15 each year. Every LLC is bound by this rule, except for an LLC in its first calendar year of business. For the first calendar year of business, an LLC will file the annual report next year. E.g., the LLC, which was formed in January 2021, will be submitting the annual report on April 15, 2022.
Penalties for non-filing or late filing
Filing the Business Privilege Tax along with the annual report is essential in the state of Alabama. There can be penalties for non-filing of the Annual Report & the Business Privilege Tax. The non-filing penalty or the late filing penalties for the annual report with the Secretary of State are $50. Alabama Authorities have the power to dissolve the LLC in certain circumstances, where the annual report has not been filed frequently.
Tax Structure in Alabama LLC
For an LLC in Alabama, the tax structure is very simple and flexible. First of all, every LLC has the advantage of a pass-through taxation. On the other hand, an LLC can choose the desired tax structure at the time of formation. There are two ways an LLC can be taxed,
Default Status:
When filing your LLC in Alabama, entrepreneurs have the opportunity to select a desirable tax structure. If they do not choose a specific structure, the LLC will be taxed under the ‘Default Status’. That means the tax will be levied based on the number of LLC members.
For a single-member LLC, it is considered a ‘disregarded entity’. This means that a single-member LLC does not have to file a federal income tax return, but the individual (or the LLC member) must file it personally. In the case of a single-member LLC, it is treated as a sole proprietorship.
In the case of a multi-member LLC, it is considered a partnership for tax purposes. Hence, the default status for a multi-member LLC is a partnership firm. LLCs are required to file a separate ‘partnership form’ with the IRS.
LLCs with Spouses: There are specific states (like California) where starting an LLC with a spouse is considered a single-member LLC instead of a partnership or multi-member LLC. In such cases, both husband and wife will be liable to pay taxes
Elective Status:
For an elective status, the LLC can choose the tax structure while filing the formation documents. LLCs in Alabama should file a separate tax form if they do not wish to be taxed by default. Many LLCs choose to be taxed as a corporation to enjoy corporate benefits, especially if the LLC is large.
LLCs can choose between S-Corp and C-Corp tax status when filing the formation document in Alabama. In that case, the concerned LLC needs to submit a separate form for each type it chooses. For the S-Corp type, Form 2553 must be submitted; for the C-Corp type, Form 8832 must be submitted.
In Alabama, there may be local taxes (inquire with the local government body for details) that LLCs must pay to be updated. Make sure to pay and update your tax dues before you file your annual report in Alabama.
Annual Report vs Certificate of Compliance in Alabama
The Certificate of Compliance is a legal document that certifies that an LLC in Alabama is in good standing and compliant with all applicable laws. That includes an updated annual report as well. While Annual Reports show if your company is up to date.
They are both similar documents (although not identical) and serve as proof of the company’s good standing. The Annual Report is a domestic document, whereas the Certificate of Compliance in Alabama is a mandatory document if the LLC is going beyond the home state to a foreign state. There are several ways to obtain a Certificate of Compliance in Alabama.
In Alabama, you must request a Certificate of Compliance through the ADOR – Department of Revenue – Certificate of Compliance. The Alabama Revenue Department carefully reviews the application and issues the Certificate. $14 must be paid to the Revenue Department for the application ($10) and processing ($4). The amount might be more depending on the number of copies you request. If you request additional copies of documents, you may incur an additional fee.
Request Certificate of Compliance:
- Online application: Apply through ADOR – Department of Revenue – Certificate of Compliance
- Offline application: Not available
- Fees: $14
Why Do LLCs Have to File the Annual Report?
Some of the states are not required to file this yearly report, commonly known as the Annual Report. However, there are some reasons why states should file an LLC Annual Report. Here are some reasons,
To Maintain the Accuracy of the Information
An annual report filed by the LLC has all the updated information about its official addresses & the names or addresses of all its officials. This updated information allows the State authorities to track down any LLC when communicating.
To Provide the Correct Correspondence
Many times, any creditor or other entity willing to transact with the LLC requires the correct correspondence address. If this information (which can only be modified with the help of an annual report) is not updated every year, such entities will not be able to communicate with them.
To Notify the Government About All the Significant Changes
If you have changed your main business address or had new business appointments of managers or members, the annual public information report notifies the State Government Entities about it. So, the next time someone questions a newer reform that you have introduced in your LLC, you will be saved because you had submitted the information to the Government.
To Provide an Activity Log of an LLC
The Annual report is like an activity log of the LLC. It brings on record all the transactions, new associations, appointments, etc. & keeps those records intact for all future references.
To Help You With the One-time Filing of Taxes
The annual report is an excellent means to keep you on your toes in case of your dues payment. Every LLC must pay taxes through the annual report filing. By filing the report on time, the LLC can manage the exemptions & can avoid penalties imposed by the Government.
To Enable the State to Track the Payments
The government authorities use all the information filed through the annual report for tracking the payment of State Taxes.
Seek the Help of a Registered Agent
Every State will have a different rule for filing the Annual Report. Usually, it is submitted every year, but it is submitted once in two years in some states. Some states require the filing of the report only once in ten years.
Not only the timing, the mode of filing, the proper addresses, exemptions, legality, annual report compliance, etc., have to be taken care of while paying the taxes or filing any reports with the State authorities. In many such scenarios, it is advised that an LLC appoints a Registered Agent to manage all this. Check out the best LLC service that offers all the services at an affordable price. An experienced agent is required for:
- Streamlining the mandatory processes & filing.
- Sending or receiving any documents.
- Reminding you about important dates of filing or payment of taxes.
- Simplifying the filing procedures.
- Avoid any penalties.
- Flexibility in working.
- Maintaining Privacy (as it keeps your personal records off the public record)
You can read more about an Alabama Registered Agent here.
FAQs
Yes, an annual report is essential for every business entity in most states. Some states also require biennial or decennial reports to be filed.
A Yearly Business Report or the annual report typically incorporates the address of the business, names & addresses of the members, a list of all the signatories, SSN of the members, & details of the registered agent.
A Registered Agent is well-aware of all the filing requirements, annual report filing fee, & overall Annual Report compliance. The knowledge & proficiency of the registered agent allow the smooth filing of reports & other fees.
The most important thing for filing an Annual Report is record-keeping. Make sure that you document every other transaction well.
Yes, the fees may vary depending on the type of entity or the type of legal entity you are representing.
In Conclusion
In conclusion, we can see that the annual report, which is also called the Franchise Tax Public Information Report, is much easier to file. However, it is mandatory to file the report on time to avoid any penalties. If you are running an LLC in the state of Alabama, you have to comply with the filing of certain important documents, including the annual report or the Franchise Tax Public Information Report, as it is named in the state of Alabama.
It is also important to note that once this Public Information Report is filed with the Comptroller of Public Accounts, there is no need for additional filing with the Secretary of State. Additionally, please note that an annual report is not the same as a Certificate of Compliance in Alabama. They might look similar, as many parts of the certificate are the same as those in the annual report; however, it is a completely different document and should be compliant with the filing requirements for the annual report in Alabama.