The LLC annual compliance checklist, reordered by what actually breaks

My llc annual compliance checklist was sorted by date for 2 years. That is the obvious way to sort one. It is also why I watched a company tick off 3 filings on time and miss the 1 that mattered.

Sorting by date tells you what is next. It does not tell you what breaks. Those are different questions, and only the second one has consequences attached.

This is the corrected version, written after I sat down with the state fee pages and worked out that the order I had been using put the cheapest filing with the worst consequences near the bottom of the page. Same filings, same deadlines, reordered by what actually stops you trading, and the reorder took an afternoon of reading state fee pages rather than any new information.

The 4 dates, because you still need them

Start with the calendar, then throw away the ordering. Do not diary these by size, and never assume the expensive one is the urgent one.

A Delaware LLC owes 400 dollars a year by 1 June and files no annual report at all. The state puts it in 1 line: “LLCs, LPs, and GPs are not required to file Annual Franchise Tax reports with the Division of Corporations, they must pay the $400 yearly tax on or before June 1st”. There is no proration, so a company alive for 6 weeks of the year owes the same as one alive for 12 months.

A Delaware corporation is a different animal on a different date. Annual report and franchise tax by 1 March, the report itself at 50 dollars, and the tax at a minimum of 175 dollars under one method or 400 under the other.

Miss either and the state charges “a penalty of $200.00 plus 1.5% interest per month on tax and penalty”. Read that twice: the interest runs on the penalty as well as the tax, so the 2 grow together.

Wyoming does not use a fixed national date at all. Its annual report falls on the first day of your anniversary month, which means a portfolio of companies formed in different months has its deadlines scattered across the calendar rather than stacked on 1 date. Florida wants its annual report by 1 May, and charges 400 dollars for lateness against a filing fee of 138.75, so the penalty is nearly 3 times the fee. California wants 800 dollars a year whether or not the company trades, and that one is worth sitting with for a moment, because it is charged to a company with no revenue, no customers and no activity of any kind, purely for existing on the register, and it is 2 times the Delaware figure that people spend whole forum threads complaining about. Texas charges no annual fee but still expects the franchise report by 15 May, tax or no tax.

Those are the dates, and now the part I had wrong.

What actually breaks, in order

I had been treating every line on the list as equally urgent, which is another way of saying I had not thought about any of them.

The filing that stops your business is not the most expensive one. It is the one that costs you good standing, because good standing is the thing other people check. A bank opening an account asks for it. An acquirer onboarding a merchant asks for it. An investor's lawyer asks for it before a wire moves, and none of those 3 will accept your assurance that the filing is coming.

So order the list by that. What kills good standing goes first, whatever it costs. What merely costs money goes second, whatever the deadline.

In Delaware the annual report at 50 dollars sits in the first group and a quarterly estimated payment sits in the second, which is the opposite of how I used to rank them by size.

What a certificate of good standing actually is

Here is where I lost time, and where a lot of people lose money.

There are 2 different things with similar names, and only one of them is a document. Delaware will let you check status on its website “for a fee of $10.00 per entity for status or $20.00 per entity for more detailed information including current franchise tax assessment, current filing history and more”. That is a lookup and nothing more, and the page says so directly: it “will not generate an official certificate of good standing”.

The document is ordered separately and costs more. “The fee is $50.00 per certificate for a short form certificate of status”, which carries the entity name and its status at the moment of issue. The long form Certificate of Good Standing is 175 dollars and “states all documents that have been filed, including the dates and times and any name changes that occurred along with the status at the time the certificate is issued”.

Three prices for what people call the same thing: 10 dollars, 50 dollars, 175 dollars. I have watched somebody send a 10 dollar screenshot to a bank and be surprised when it came back.

Ask which one they want before you order. That question takes 1 email and it is the cheapest email in this piece. Most banks want the short form. Investor counsel doing a diligence exercise usually wants the long form, because the filing history is the point rather than the status line.

What happens after you lose it, which I cannot fully tell you

This is the gap in my own understanding, and I would rather mark it than paper over it.

Losing good standing is not a single event with a single price. A company that misses a payment sits in a bad status for a while, and if nobody fixes it the state eventually moves it further along, to void or forfeited or administratively dissolved depending on the state and the entity type. Getting back is a filing plus the arrears plus a fee.

I cannot tell you what that costs in your state. I checked 2 of them and the paths were different enough that I do not trust any general answer, and I am not going to invent a range that sounds authoritative. What I am confident about is the direction: reinstatement always costs more than the filing you missed, and it always takes longer than you have when a bank is waiting on it.

I do not know whether the intermediate statuses show up in the 10 dollar lookup a bank runs either. My guess is that they are, since the same status lookup that shows good standing must show something else when the standing is gone, but I have not tested it with a lapsed entity and would not defend the guess. If somebody has run that experiment I would like to see it.

What I do think, without much doubt, is that the asymmetry is the whole argument for the 30 day lead I mention below. A filing done early costs an afternoon. The same filing done late costs an afternoon, a penalty, an interest calculation and a conversation with whoever was waiting on the certificate.

The one I keep forgetting

A short digression, and it has nothing to do with the 4 deadlines above.

Every one of these filings assumes somebody is reading the post. A registered agent exists to receive service of process and state correspondence, and the reason a company falls out of good standing is very often not that the owner refused to pay 400 dollars. It is that the notice went to an agent whose engagement had lapsed, or to an address the owner changed 2 years ago and never updated with the state.

I find that harder to defend against than any deadline, because a deadline is visible on a calendar and a broken address is visible nowhere at all. The failure is silent by construction. Anyway, back to the list.

Where you operate, which is a separate register

The keyword people search here is foreign qualification. That word foreign is doing real damage. It does not mean another country. It never did. It means any state other than the one where the company was formed, so a Delaware LLC run from an office in Georgia is a foreign entity in Georgia and is expected to register there.

That second registration brings its own annual report, its own fee and its own deadline, on top of everything in the calendar above. A company that formed in Delaware for the legal framework and operates from 1 other state does not have 1 compliance calendar. It has 2 of them, running on different dates, with different fees, enforced by 2 different offices that do not talk to each other and will not warn you about the other one.

I am not going to give you the trigger threshold. I want to be plain about why. Each state defines transacting business differently. The definitions turn on employees, premises and where contracts get signed, and I have not read 50 statutes. Anybody who hands you a single national rule for this has not read them either.

What I would do this week

Write down 4 things, not 12. That is the whole method. The formation state's annual filing, the operating state's annual filing, the agent's renewal, and the address the state has on file for you.

Then check your own status for 10 dollars before anybody else checks it for you. Do it today rather than on the day a bank asks. It is the cheapest diagnostic here. Most people have never run it, and I had not either until this spring, which mildly annoys me every time I think about it.

Put the deadlines in the calendar with a 30 day lead rather than a 7 day one, and put them in the calendar that other people at the company can see, because a reminder sitting privately on the phone of whoever happens to be travelling that week is the same as no reminder at all. The lead matters more than the date, because every one of these filings can be done in an afternoon and none of them can be done retroactively.

Keep a copy of the last certificate you ordered. Note the date on it. Certificates go stale, banks usually want one issued within the last 30 to 90 days, and knowing when yours was issued tells you whether you can send it today or need to order again.

What I could not establish

I could not find a single source that states, across states, how long a certificate of good standing stays acceptable. The window I keep meeting in practice is 30 to 90 days, but that is the requesting institution's rule rather than the state's, and no state I checked publishes an expiry on the certificate itself. Treat any number you hear as that particular bank's policy.

I also do not know how many companies lose good standing through a lapsed agent rather than an unpaid fee. My suspicion is that it is a large share, because the pattern shows up constantly in the questions I get, but state records show the outcome and not the cause, so the split is not visible from outside.

None of this is legal or tax advice and we are not your counsel. A company with employees in several states, a licence in a regulated activity or an existing delinquency has facts this page does not reach, and those are worth a professional rather than a checklist.

What I keep thinking about is that 1 decision, the ordering. A list sorted by date looks organised and asks nothing of you, and a list sorted by consequence is uglier and tells you where to spend your attention. I kept the pretty one for 2 years because it was easier to look at, which is a poor reason and the true one.