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The objective of the annual report is threefold. The annual report keeps the Government informed about all the updates, communicates about all the modifications or changes, & keeps the LLC members informed about the necessary taxes and costs. This article has all the information about the Pennsylvania LLC annual report filing in Pennsylvania.
An annual report can be called an address book, as it features all the relevant addresses of the company & the members. This annual report is a comprehensive record of the company’s activities for the entire year. It is also referred to as the Annual Franchise Tax Report, as it facilitates the filing of the franchise tax.
Content of the Annual Report
Typically, the annual report filed by a Pennsylvania LLC (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 Pennsylvania, make sure to pay all the tax dues for the year. Note that the LLC Annual Report is not the same as the Subsistence Certificate in Pennsylvania.
Does the State of Pennsylvania Require an Annual Report Filing?
Pennsylvania is one of those few states in America that does not require an Annual Report. If you want to form an LLC in Pennsylvania, filing an annual report will not be a part of your compliance. However, a decennial report known as the Decennial Report of Association Continued Existence is required by the Pennsylvania Secretary of State.
How to File a Pennsylvania LLC Annual Report
LLCs in Pennsylvania do not file a yearly report; instead, they have to file a report every 10 years. It is called the Decennial Report. In Pennsylvania, annual/decennial reports can be filed with the Secretary of State online by following a few simple steps.
- Step 1: Visit the Pennsylvania Business Document Filing System website. To file the report online, LLCs must have an account with them.
- Step 2: If you are a registered member on the website, then you need to provide your credentials to log in to the site. If not, then sign up to the site with your Name, Phone Number, etc.
- Step 3: Once logged in, you can start filing your Annual/Decennial Reports online. For first-time users, after registration is complete, you need to log in to the portal again.
Filing Pennsylvania LLC Annual Report By Mail
- To file the annual report by mail, one has to visit the Business Formation page.
- Find the Decennial Report filing form from the list given on the page.
- Download the form on your device, and take a printout.
- Make sure all the information in the form is correct.
- Send the filled-out form to the address, PA Department of State, PO Box 8722, Harrisburg, PA 17105-8722.
Annual Report Deadline
As mentioned above, filing the Annual Report is not a mandatory requirement for an LLC. An LLC operating in Pennsylvania does not have a deadline for filing a yearly report. However, each LLC in Pennsylvania must file a Decennial Report every 10 years.
Penalties for Non-filing or late filing
As there is no mandatory rule to file an annual report in Pennsylvania, there’s no penalty for not filing or for filing a delay.
Tax Structure in Pennsylvania LLC
For an LLC in Pennsylvania, 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 Pennsylvania, 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 Pennsylvania 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 Pennsylvania. 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 Pennsylvania, 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 Pennsylvania.
Annual Report vs Subsistence Certificate in Pennsylvania
The Subsistence Certificate is a legal document that certifies that an LLC in Pennsylvania 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 Subsistence Certificate in Pennsylvania is a mandatory document if the LLC is going beyond the home state to a foreign state. There are several ways to obtain a Subsistence Certificate in Pennsylvania.
In Pennsylvania, to obtain a Subsistence Certificate, follow the links below. Log in to the SOS portal and request a certificate online. A filing fee of $40 must be paid to the SOS to obtain the Certificate of Good Standing. 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.
Generate Subsistence Certificate:
- Instruction: Guide to Request a Subsistence Certificate
- Online application: Request a Subsistence Certificate
- Offline application: No offline form is available.
- Fees: $40.
Why Do LLCs Have to File the Annual Report?
Some states are not required to file this yearly report, commonly referred to as the Annual Report. However, there are several reasons why some states require an LLC to file an 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 serves as a record of the LLC’s activities. 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 is required to 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 annually, but in some states, it is submitted every other year. Some states require the filing of the report only once in ten years.
Not only the timing, but also the mode of filing, proper addresses, exemptions, legality, annual report compliance, etc., must be taken care of when paying taxes or filing reports with 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 a Pennsylvania Registered Agent here.
FAQs
Yes, an annual report is essential for every business entity in most states. Some states also ask to file 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. Ensure that you document every transaction thoroughly.
Yes, the fees may vary depending on the type of entity or the type of legal entity you are representing.
In Conclusion
An LLC must file various types of reports, such as the Application for Reinstatement and the Periodic Report of a Limited Partnership (usually filed by an exempt nonprofit organization), depending on the type of entity. The Annual Report is mandatory irrespective of the entity type. It requires compliance across entities.
Additionally, please note that an annual report is not the same as a Subsistence Certificate in the state of Pennsylvania. 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 Pennsylvania.