Annual Filing Replaces Decennial Reporting in Pennsylvania
March 1, 2023
Under Act 122, which was signed into law last November, all Pennsylvania businesses must complete an annual filing, beginning in 2024. Previously, reporting was done every ten years, so this represents a big change for business owners. No annual report is required to be filed in 2023; instead businesses must begin filing annual reports in 2024 with deadlines based on the type of entity making the filing.
- Corporations must file by July 1st
- Limited liability companies by October 1st, and
- All other entities by end of the calendar year.
The Department of State is required to send notice of the filing deadline at least two months prior, but it is important to note that its failure to send or a business’s failure to receive the notice does not excuse a failure to file.
The entities required to file these new annual reports are the following:
- corporations (for-profit and not-for-profit),
- limited liability companies,
- limited partnerships,
- business trusts,
- domestic limited liability partnerships,
- domestic electing partnerships, and
- registered foreign associations.
What is needed for filing the report is simple and straightforward. The annual report will be very similar to the decennial report and requires:
- the name of the entity and jurisdiction in which the entity was formed,
- the registered office address,
- at least one named “governor,” who is a person with management responsibilities,
- names and titles of principal officers,
- the address of the principal office wherever located, and
- the entity number issued by the Pennsylvania Department of State. It should be noted that an entity or association can use the annual filing to change its registered office rather than use the other procedures outlined in the BCL.
Consequences for a failure to file the annual report can be very significant. If an entity fails to file the annual report within 6 months of its reporting deadline, the Department of State may initiate proceedings to either administratively dissolve the entity (for corporations, LLCs, and limited partnerships), or cancel the registration (for limited liability or electing partnerships). If an entity is dissolved it may only engage in activities necessary to wind up and liquidate. If an entity has its Pennsylvania registration canceled, it can continue to do business, but it will lose its limited liability protection. Fortunately, the Act provides for both a grace period and reinstatement. To provide an adjustment period to businesses, the state legislature created a 3-year grace period which prohibits the Department of State from initiating any proceedings for dissolution or cancellation of registration until 2027. This effectively gives businesses 3 years to make filing the annual report a natural part of the business’ yearly operations. The Act also grants any business entity the right to file for reinstatement should it fail to file the report and be administratively dissolved or have its registration cancelled. A business entity can file for reinstatement at any time and will have its dissolution or cancellation reversed retroactively. However, if during the interim time between administrative dissolution/cancellation and filing for reinstatement, another entity is formed and registers with the name of the dissolved/cancelled business, the name will be lost to the new filer.
Act 122 places an increased reporting burden on businesses operating in Pennsylvania. While the law provides a year for businesses to learn of the new reporting requirement and a 3-year grace period for businesses to fail to file without issue, the consequences for a failure to file after 2026 can have serious repercussions. Dissolution and cancellation can open businesses up to substantial liability due to the loss of limited liability protections and the potentially more destructive consequence of having to rename a business should a new entity poach the name before reinstatement.
While all of this can seem daunting, our team of corporate and business attorneys are well versed in federal, state, and local reporting requirements and can assist in meeting the requirements so you can focus on the more crucial matter of running your business. For more information, contact us online or call (412) 338-1100.