Running a corporation is exciting, but with great opportunity comes great responsibility. One of the biggest, yet easiest, things you can do for your business each year is to file your annual return for corporation. You might think it’s simple, just another piece of paperwork, but believe us not filing on time creates some very real issues for your business.
In this comprehensive guide, we will be discussing in detail the top 5 reasons why you should file your “annual return” and what happens if you don’t. Let’s dive into the nitty-gritty details and ensure that your business is running on track!
What is an Annual Return for a Corporation?
An annual return is generally a form you file each year with the government as part of keeping them posted about your business. Your information will include:
- Your business address
- Who runs the company (directors)
- Who owns shares in the company
It is not the same as a tax return but equally important for the legal existence of a business. In most jurisdictions, Annual Return is filed separately from tax returns.
Important Reasons to File Your Annual Return
1. Keeps Your Corporation Active
Failure to file an annual return may lead to the government canceling your corporation. This means that your business is no longer legitimate, and you cannot operate your company anymore. This can also make things like getting loans, signing contracts, and operating legally a lot harder.
Filing your annual return ensures that your corporation remains active and legal.
2. Avoids Fines and Penalties
If you miss the deadline to file your annual return, you’ll be fined. The fines are small at first but get larger the longer you wait.
Here is one simple chart showing how fines increase over time:
Delay Time
Fine Amount
3. Keeps Your Business Information Updated
Your business may have changed during the year. Perhaps you moved your office, added new people, or changed your ownership. Filing an annual return ensures the government is aware of such changes.
If you don’t update your information, it may lead to confusion or even delays when you need to perform tasks such as getting a loan or signing contracts.
If you need to update/change your business information, consider checking out these accredited websites:
4. Assists You in Keeping Business Benefits
As a corporation, you may get some great perks, such as:
- Protection of your personal assets (if your business faces problems, your personal property is safe).
- Improved access to credit and finance.
- Increased customer, partner, and investor trust.
In other words, some of the benefits you get from filing your return annually may be lost if you fail to do this. Keeping your business in good standing with the government means you get to retain these benefits.
5. Makes Future Business Easier
If you file your annual return, then everything runs very smoothly. If you require any loan or want to sign any big contract or want to expand your business, you won’t have any problem. Everything will be updated, and you will not have to face any delay or mess.
Filing your return on time can speed up and simplify future business decisions.
What If You Fail to File an Annual Return?
Now you know why it is important to file your annual return. But what happens if one doesn’t file it?
1. Your Corporation can be Dissolved
If you don’t file your corporation’s annual return, the government can revoke your corporation. That means you can no longer operate as a corporation. You will lose all the legal protections and benefits that come with having a corporation.
You would have to go through the whole process again to start a new corporation after it’s been dissolved, which can be very time-consuming and expensive.
2. You Will be Fined
Failure to submit the annual return in due time leads to fines, and the longer you wait, the higher the fines become. These fines start piling up and may harm your business finances. It’s best to file early to avoid paying extra fees.
3. You Risk Losing Your Reputation
If your corporation has been dissolved or is inactive, it gives the appearance of an unprofessional business. Banks and investors will have less confidence in you, as will your customers. They may even consider your business to be unorganized, or not a serious one. Keeping your corporation active helps protect your reputation.
4. Can Cause Legal Problems
Besides these, failure to file the annual return may also give birth to some legal problems. This would mean that if you happen to get involved in any sort of litigation, you may fail to prove that your business has a legitimate registration. This could complicate everything.
How to File the Annual Return for Your Corporation
Filing your annual return is easy-online or by mail. Here’s how:
- Gather Your Information: Make sure you have the latest details about your business, including address, names of directors and shareholders.
- Fill Out a Form: Go to a government site or visit the IncorpPro’s website and fill out a simple form with the updated information.
- Filing Fees: A small fee is normally attached to filing the return.
- Get Confirmation: After you file, you’ll get a confirmation that your corporation is still in good standing.
IncorpPro will file your annual return for you!
We value your busy schedule in running a business, and that is why IncorpPro offers to file your annual return on your behalf. Let us handle the paperwork so you don’t have to worry about missed deadlines or fines. Contact us today and let us keep your corporation active and in good standing!
Conclusion
Filing an annual return for your company is quite a simple thing yet it carries great value with itself. It not only keeps your business legal but also helps keep you away from fines and any other glitches that may hamper the proper running of the businesses. It will safeguard your reputation on time and enable the growth of your business.
Don’t be late! File your annual return each year. In case you want assistance, IncorpPro is here to help!