“Compliance” can mean many things. This article is about what filings are required by the California Secretary of State. In other posts, we’ll be writing about corporate minutes and such.
What is due to the Sec. of State, when, and how much does it cost?
California law requires corporations and limited liability companies to update their records with the Secretary of State’s office on an annual basis.
This filing is called the Annual Statement of Information.
It is due once a year, unless you make other changes, such as your company’s business address, and the filing fee is $25.
BUT, if you miss the filing due date, the Secretary of State tacks on another $250 late fee.
We recently polled a large sampling of our clients and found that nearly half of them had missed the filing due date for the Annual Statement of Information. For them, the $25 fee turned into $275.
We want to make sure this never happens to any of our clients.
So then, let’s lay out the requirements:
Q: What is the purpose of the Annual Statement of Information?
A: It lets the Secretary of State know if you’ve changed owners, executives, company address, or your agent for service of process. The forms are a little different for corporations and LLC’s, but they are generally the same.
Q: When is it due?
A: It is due annually, any time in the five calendar months preceeding the anniversary of your entity formation.
For example, if your corporation or LLC formed on November 20, then you must file the Statement of Information each year, at some point in July, August, September, October, or November, but no later than 11/20.
Q: What does it cost?
A: As mentioned above, the filing fee is $25. Miss the date, though, and you’ll be hit with the additional fine of $250.
Q: Don’t we also need to file Annual Minutes with the Secretary of State?
A: No, not in California. Minutes (both annually and sometimes more frequently) are to be kept by the corporation or LLC. These are your internal records. You are not required to file them with the California Secretary of State. (Some states differ slightly in this regard, but that’s for another blog post.)
Q: Seriously, we got a letter in the mail that said we need to file annual minutes. Are you sure?
A: As we’ve discussed, there are private companies that sell corporate compliance services. Several have been known to be very agressive with their marketing, going so far as to send very official looking letters.
These companies offer a service that will generate Annual Minutes for you. This service may be an excellent service, but many of our clients have complained that the confusion comes from the letters’ (somewhat intimidating) suggestion that these minutes need to be filed to avoid fines. This just isn’t the case. There certainly are very important reasons to regularly update your minutes, but this is not one of them.
The Secretary of State has even issued a public warning memo, calling them “Misleading Business Solicitations.”
If you have any other questions about the Annual Statement of Information, please Contact Us. We’ll do our best to answer your questions or sort out whatever situation you may have.