What’s the difference between an annual report and a tax filing?

An annual report and a tax filing are not the same thing, even though people often confuse them. An annual report is a state compliance filing that keeps your LLC or corporation in good standing with the state where it's registered. It typically updates your company information, confirms your registered agent, and requires you to pay a state fee; in some states it also confirms authorized shares. Every company registered in the U.S. must file one with its formation state, and you still owe this filing even if your company had $0 in revenue for the year. Skipping it can lead to late fees, loss of good standing, or administrative dissolution of your company. A tax filing is your return to the IRS at the federal level (and, in many cases, to your state's tax authority as well). Most LLCs need to handle both an annual report and a tax filing each year, since they serve entirely different purposes. Skipping your tax filing can trigger IRS penalties even with $0 in revenue, which is especially important for foreign-owned LLCs that still have federal filing obligations. Federal taxes are paid to the IRS and apply nationwide, while state taxes are paid to the state where your company is registered and the rules vary from state to state. If you're on doola's Tax and Compliance plan or Business-in-a-Box plan, doola tracks your annual report due date and files it for you.