There is no doubt that the U.S., as one of the world's largest economies, has a large consumer base and strong purchasing power, which, coupled with its multicultural fusion, provides companies with innovative thinking and diverse business opportunities to expand their markets.

Rushing to these advantages, many domestic companies have chosen to register their companies in the United States. However, it is not registered on the end of the matter, the daily business behavior is closely related to the company's annual review and tax filing, which should not be underestimated.

*The 2024 U.S. tax season will begin on January 29th, with a deadline of April 15th, and a deadline of October 15th for filing extensions!  

01 About the "annual review"

An annual audit of a U.S. corporation is an important step in the legal operation of a company, with the primary purpose of comprehensively reviewing and evaluating the company's financial condition and business operations, and helping to identify and resolve potential financial risks and problems. The annual audit can improve the company's financial management and internal control level, correct possible misconduct, ensure the company's operational compliance, and maintain the validity of registration.  

If the annual review is not carried out on time, will the consequences be serious? !  

Annual audits are one of the key tasks in maintaining the normal operation of a U.S. company, and it is especially important that they are done on time.   If a company fails to keep its annual audit, it may face the following consequences:

● Imposition of fines: a late annual audit will result in fines, which are primarily based on the state in which the company is incorporated, the length of time it has been overdue, and the size of the company.

● Impact on business: A long overdue annual audit or failure to pay a fine may result in the company being deemed inactive or operating illegally by the state, which may result in the company being canceled or having its business license revoked.

● Causing Disputes: Failure to disclose required information or documents in a timely manner will most likely violate state statutes and lead to legal disputes. In addition, shareholders and directors may be denied visas due to the company's poor record.

● Reputational Damage: A series of bad records such as fines for overdue annual audits, failure to make up for audits, etc. will damage the company's reputation and make it more difficult to incorporate in the future.  

Therefore, timely completion of company annual audit procedures is crucial to maintain normal operation and good reputation.

If you do not intend to continue to operate a U.S. company, in order to prevent legal disputes, you should carry out the company cancellation according to the official procedures, such as carrying out the cancellation work within 3 months of the validity period of the company, canceling the company's bank account and paying all the fines, etc., and completing the cancellation procedures according to the regulations to legally end the business activities.  

Annual review requirements vary from state to state.

Annual audits include renewal of the Certificate of Incorporation, renewal of U.S. corporate government documents, and registration of the company's registered address. However, with more than 50 states in the U.S., each state has different requirements and times for annual audits, which should be handled in accordance with the requirements of the state of incorporation. Most states have annual audits, i.e., once a year, and some states have designated annual audit dates or cycles. Below is a list of states with annual audits.

Colorado ｜ In Colorado, the annual examination needs to be completed within 2 months after the expiration date of the corporation.

Delaware ｜ In Delaware, the annual examination date for C Corporations (C Corporations) is March 1 of each year, and for Limited Liability Companies (LLCs), it is June 1 of each year.

Florida & Texas ｜ Florida requires annual audits by May 1 of each year, and Texas by May 15 of each year.

New York｜ New York State requires annual audits every two years.  

Description of the materials required for annual audits and the process.

The materials required for the annual review of a U.S. corporation include: Articles of Incorporation of the U.S. company, copies of documents certifying the registration of the U.S. company, copies of a full set of documents for the registration of the U.S. company, and copies of ID cards or passports of the directors and shareholders.

In the event of a change in shareholders, a copy of the shareholder change document is required; if there is a capital increase, a copy of the capital increase document is required; when the company name is changed, a copy of the U.S. company name change certificate must be provided.

The annual audit process is roughly - Fill out an annual audit form containing basic information about the company, shareholders, directors and finances as required by the state of incorporation, and then submit it to the state either online or by mail, with annual fees varying from state to state. When the annual audit documents are approved, the U.S. corporations will be authorized to continue doing business.  

02 About the "tax returns"

U.S. companies are required to submit annual financial reports to the IRS each year to ensure that taxes are paid on time and to maintain the company's legal business status.  

There are two main scenarios for filing tax returns

● The first, if you have registered a U.S. company, but have not actually operated on U.S. soil and have not generated any trade transactions, then there is no need to do the books and pay taxes, but it is worth noting that this situation requires a tax return, which can be filed at zero.

● The second, if you have registered a U.S. company and carry out business activities on U.S. soil, and generate trade transaction costs, then you need to pay taxes and U.S. accountants to do the books.  

Frequency of tax filing and required information

The frequency of tax filing for a U.S. incorporated company depends on the type of company and its turnover and income. LLC companies file tax returns once a year, and can choose to file personal income tax returns or corporate income tax returns; C corporations also file tax returns once a year, and as an independent legal entity, they are required to file tax returns in accordance with the corporate income tax method. Usually, the required information for U.S. corporate tax filing includes certificate of incorporation, tax ID number, shareholder information, previous year's tax filing records, one year's bank flow, 1099 forms, and receipts and disbursements.  

What are the consequences of failing to file a tax return?

U.S. Corporations that do not file tax returns as required will face fines and penalties (interest on penalties), which vary from state to state and are paid on a daily basis. If you do not file your tax return on time and do not pay your taxes as required, if you are late or ignore the tax office's email warnings, your company may be frozen, your business license may be revoked, and the credit of your company and its directors and shareholders may be damaged as a result, resulting in a series of adverse consequences. In order to ensure the normal operation of the company, it is recommended to conduct annual audits and submit tax returns on time, which can improve the level of financial management, better maintain the compliance of the company's business, build up the company's credibility and reputation in the business field, and facilitate the development of international business.  

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