What does an LLC have to do every year?
Most LLCs file one state report a year, pay any state tax or fee that comes with it, keep a registered agent, and file federal and state tax returns. Records and the operating agreement need updating when something changes.
| Requirement | How often | Filed with | Guide |
|---|---|---|---|
| Annual or biennial report | Every year or every two years, by state | Secretary of State | What is an LLC annual report |
| State franchise tax or annual fee | Yearly in states that charge one | State tax agency or Secretary of State | What is a franchise tax |
| Registered agent | At all times | Named in state records | Registered agent services for LLCs |
| Federal and state tax returns | Yearly | IRS and state tax agency | How to file LLC taxes |
| Good standing | Ongoing | Secretary of State | Keep your LLC in good standing |
| Records and operating agreement updates | When something changes | Kept by the LLC | LLC operating agreement |
How do you keep an LLC in good standing with the state?
File every required report on time, pay what the state charges, and keep a working registered agent on record. An LLC that does all three is in good standing and can get a certificate proving it.
Annual and biennial reports
Most states ask LLCs to confirm their address, registered agent and managers or members once a year. New York and Alaska ask every two years instead. A few states, including Arizona, Missouri, New Mexico and Ohio, don’t require a regular report from LLCs at all. Deadlines are set by state, and some tie the due date to the month the LLC was formed. Our annual report guide lists the rules by state.
Franchise taxes and annual fees
Some states charge LLCs a yearly tax just for existing, whether or not the business made money. California’s annual LLC tax is $800, and Delaware charges LLCs a flat annual tax of $300. These are separate from income tax and are due even in a year with no revenue.
Registered agent
Every state requires an LLC to name a registered agent with a physical address in that state. If your agent resigns or your service lapses, you have to name a new one, and an LLC without an agent can lose good standing. See how to change your registered agent and what penalties apply without one.
Certificate of good standing
Banks, lenders and other states often ask for proof that your LLC is current. The state issues a certificate of good standing when every report and fee is up to date.
Reinstatement after dissolution
If the state administratively dissolves your LLC for missed filings, most states let you bring it back by filing the overdue reports and paying the fees and penalties. Start soon: some states limit how long you have. Our LLC reinstatement guide covers the steps.
LLC records and finances
Few state LLC laws require formal record-keeping beyond a short list of documents, but good records protect you in a dispute, an audit or a sale. They also help show a court that the LLC is a separate business from its owners.
Minutes and resolutions
Most states don’t require LLCs to hold meetings or keep minutes, though your operating agreement might. Many owners still record major decisions in LLC minutes. Banks usually ask for an LLC bank resolution that names who can open accounts and sign.
A separate business bank account
Paying personal bills from the LLC’s account, or business bills from your own, is called commingling. It is one of the facts courts look at when deciding whether to hold owners personally liable, a process known as piercing the corporate veil. A business bank account for your LLC keeps the line clear. For the full picture, read our guide to LLC asset protection.
Fiscal year
An LLC’s tax year usually follows its owners. A single-member LLC taxed as a sole proprietorship uses the owner’s tax year. A multi-member LLC taxed as a partnership generally has to use the tax year of its majority owners, which is the calendar year for most individuals, under IRS Publication 538. See choosing an LLC fiscal year for the exceptions.
How do you change the members or owners of an LLC?
Follow the steps in your operating agreement, sign the paperwork that records the change, and update the IRS and the state where required. The operating agreement controls who can join, leave or sell.
The usual order looks like this.
- Check the operating agreement for voting, consent and buyout rules.
- Sign the documents that record the change, such as an assignment of interest, a buy-sell agreement or an amended operating agreement.
- Update the state if your articles or annual report list members or managers.
- Tell the IRS if the LLC’s responsible party changes. Use Form 8822-B within 60 days.
A change in the number of members can also change how the IRS taxes the LLC. A two-member LLC that drops to one member is treated as a disregarded entity by default, and a single-member LLC that adds a member becomes a partnership.
Each change has its own guide.
- Add members to an LLC
- Remove an LLC member
- Transfer LLC ownership
- Amend an operating agreement
- LLC buy-sell agreements
- LLC capital contributions and membership certificates
Can one LLC run more than one business?
Yes. One LLC can run several lines of business, often under separate trade names (DBAs). The trade-off is that one business’s debts and lawsuits can reach the assets of the others, because they all sit in the same company.
Owners who want that risk split up usually form a separate LLC for each business, sometimes with one LLC owning the others as a holding company. A few states allow a series LLC, which divides one company into protected cells. Compare the options in multiple businesses under one LLC and can an LLC own another LLC.
Foreign LLC registration in other states
An LLC that does business outside its home state usually has to register there as a foreign LLC, with its own registered agent and annual report. Read domestic LLC vs foreign LLC for what counts as doing business.
A move to a new state
You can register in the new state as a foreign LLC, convert or domesticate the LLC where both states allow it, or form a new LLC and dissolve the old one. Each path has different costs and tax effects, covered in how to move your LLC to another state.
How to close or sell an LLC
Closing an LLC means filing articles of dissolution, settling debts and filing final tax returns. Stopping work and skipping the annual report leaves fees and penalties running. See how to dissolve an LLC. If someone wants to buy the business, start with how to sell an LLC.
Why do LLCs fall out of compliance?
Most lapses come from a small set of missed tasks.
- The annual report reminder went to an old email or address.
- The registered agent service expired or the agent moved.
- A franchise tax was skipped because the LLC had no income that year.
- Personal and business expenses were paid from the same account.
- A member left, but the operating agreement and state records still list them.
Annual report fees and deadlines by state
Each state sets its own report name, due date and fee. Find yours on your state’s LLC page, which also covers the state’s franchise tax if it has one.