Secretary of State News Flash: Big Changes to Business Annual Report Laws
During the 2017 long session, the General Assembly enacted laws making two major changes to business Annual Reports filed with the Secretary of State (SOS). The short version is that effective on January 1, 2018:
- ALL corporate Annual Reports must now be filed directly with the Secretary of State’s office, and
- Annual Report forms will be changed to include voluntary reporting of small business ownership by veterans and service-disabled veterans.
For a more in-depth explanation of these big changes, please continue reading below. Thank you to Ann B. Wall, Secretary of State’s General Counsel, Cheri Myers, Business Registration Division Director, and Keith West, Annual Reports Supervisor, for their contributions.
First Change: No More Filing Business Annual Reports with the Department of Revenue
Have you been filing clients’ taxes and Annual Reports with the N.C. Department of Revenue?
Be Aware! The Annual Report law has changed. See Various Changes to the Revenue Laws, S.L. 2017-204.
If you file an Annual Report for a business corporation or LLC after January 1, 2018, you cannot file it with the N.C. Department of Revenue (DOR). In other words, you can no longer include an Annual Report with a client’s taxes when you file those taxes with DOR.
This change takes effect on January 1, 2018 for tax year 2017. Annual Reports filed after January 1, 2018 must be filed directly with the Business Registration Division (formerly Corporations Division) in the Office of the Secretary of State (SOS).
You may file with SOS either electronically or in a paper format. Go to www.sosnc.gov/annualreports to access the Secretary of State’s convenient efiling tool and maintain a client’s “good standing” status without delays or breaks.
There are definite advantages to efiling an Annual Report with SOS. You “submit” an annual report when you send it to us. We “file” it after we check to see that it is complete. Filing is our official government action. If you submit your Annual Report online, we file it almost immediately because our system is set up to ensure that it has all the required information. Therefore, efiling an Annual Report can really help a client, particularly if the client is dealing with a lender or other business that will review the client’s status with SOS.
In addition, efiling costs your clients less than filing in paper form. (A business corporation annual report filed online is $18 plus a $2 electronic transaction fee. If filed in paper form, the fee is $25. A Limited Liability Company and Limited Liability Partnership Annual Report fee is $200, plus the $2 electronic transaction fee.) Moreover, if you file several Annual Reports at the same time, you can put them in a shopping cart and only one electronic transaction fee will apply to the invoice total amount–a lower overall customer expense.
SOS does continue to accept Annual Reports in paper format. Please send paper Annual Reports:
By USPS to: N.C. Secretary of State, Annual Reports Section, Business Registration Division, P.O. Box 29625, Raleigh, NC 27625
By courier to: N.C. Secretary of State, Annual Reports Section, Business Registration Division, 2 S. Salisbury St., Raleigh, NC 27601
We file Annual Reports in the order in which they are received. Because we have limited resources, if you use the paper based filing method, it can take up to 180 days from the day you submit the report until it is filed.
Thank you for helping the Secretary of State’s Office keep business records accurate and up-to-date.
Second Change: Business Annual Reports for Veteran-Owned Small Businesses
Military bases and their populations are important to North Carolina’s economy. That has been well documented. The numbers of veterans who own businesses in North Carolina has been less clearly documented.
North Carolina’s responsiveness to the needs of the military and veterans can affect future Base Realignment and Closing (BRAC) efforts at the federal level. On the governmental side of things, a new State government Department of Military and Veterans Affairs has been established to deal with military and veterans’ issues. On the private sector side, the North Carolina Bar Association has also created a new Military & Veterans Law Section.
The General Assembly determined that more information is needed regarding veterans’ contributions to North Carolina’s economy. Annual Reports filed with the Secretary of State’s Business Registration Division will now collect data on small businesses owned by both veterans and service-disabled veterans. See Veteran-Owned Small Business/Annual Report, S.L. 2017-90.
If you file an Annual Report for a business corporation, LLC or LLP with our Business Registration Division after January 1, 2018, you need to use the new Annual Report form. The new form will include space and instructions to voluntarily indicate that a business is a small business owned by a veteran or owned by a service-disabled veteran. A business should only check one of the new blocks on the Annual Report form if:
- Its net annual receipts do not exceed one million dollars ($1,000,000), and
- More than 50 percent of the business is owned by one or more veterans or service-disabled veterans.
We will compile a summary of the numbers of voluntarily reported veteran owned and service-disabled veteran owned small businesses. Beginning on March 1, 2019, we will provide the summary annually to the N.C. Department of Military and Veterans Affairs.