While the process for formally starting an LLC in any state is relatively front-loaded, there are still annual obligations for LLC members (owners). Each state has its own requirements and procedures for LLC maintenance. Some even require reports at a greater frequency than annually. In this article we’ll take a broad look at yearly obligations for LLC members in the U.S.
Requirements for Texas-Based LLCs
Eschewing the rules of nearly every other state, Texas law does not require members of LLCs to compile and publish an annual report with the Secretary of State. Even in this business-friendly state, though, most LLCs must pay an annual franchise tax with the state Comptroller of Public Accounts. However, your LLC might not have to pay anything if the business did not enjoy a net surplus — in other words, the income your LLC generated did not outpace the monetary contributions of you or the other members.
So, even though the Texas Secretary of State’s office exempts LLCs from having to publish annual reports, you must submit a Public Information Report in connection with state taxes. This requirement stands apart from employment and sales taxes.
Beyond the Lone Star State
The annual requirements for LLCs vary fairly substantially from state to state. As we mentioned above, most states require LLC members to publish what’s usually called an annual report. Perhaps the most well-known business-friendly state of Delaware does not require such a report from LLCs registered within its borders.
On the other end of the spectrum, California, which has a reputation for fostering a complicated business environment for business owners, collects a $800 fee annually from LLCs registered in the state — and that’s the minimum. While Texas has a no-tax threshold for LLCs, that is not the case for those in California. Depending on an LLC’s gross revenues from California sources, it might have to pay additional fees on top of the $800 flat fee. However, LLCs formed in 2021, 2022, or 2023 are not required to pay the $800 fee for their first taxable year.
One consideration that LLC owners should consider is whether they need to file annual reports wherever they have registered agents. Even if your LLC is registered in Texas, you might have to file an annual report in California if it is determined that your LLC conducts business in that state. Each state has different rules that determine whether an LLC registered in another state must have a registered agent.
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