LLC Annual Report vs Franchise Tax: What Non-Residents Must File and Pay (2027)

The annual report vs franchise tax question confuses almost every new LLC owner. One is usually a filing that updates the state's records, the other is a payment for the privilege of existing as a company, and states combine them in different ways. Some charge both, some charge one, and a few charge neither. This guide explains the difference, shows how popular states handle it, and tells you what a non-resident owner needs to watch.

Annual report vs franchise tax: the short answer

• Annual report: an information filing that confirms or updates your LLC's details, such as its address, registered agent and managers. Many states attach a fee to it.
• Franchise tax: a tax charged by some states for the right to exist or do business there. It is often not based on profit, so you may owe it even when you earn nothing.
• Different names: states use many labels, including annual report, periodic report, statement of information, license tax and annual tax.

The key point is that your state's rules decide which applies, and both are separate from your federal filings.

Annual report vs franchise tax: what an annual report is

An annual report is a form you file with the state, usually the Secretary of State. It tells the state that your LLC is still active and keeps your details current. Some states ask for it every year, some every two years, and a few not at all.

If you miss it, the usual consequences are late fees, loss of good standing and, in time, administrative dissolution. For one example, read the Florida LLC annual report guide.

Annual report vs franchise tax: what a franchise tax is

A franchise tax is a charge for the privilege of operating as an LLC in a state. It is not an income tax, and it can come in several forms:

• A flat amount. For example, Delaware charges a flat annual LLC tax. It has no annual report for LLCs, only the tax. Read Delaware LLC franchise tax.
• A minimum tax. California charges an $800 minimum annual franchise tax, even if the LLC earned nothing, plus an extra fee at higher revenue levels. See California LLC franchise tax.
• A calculated tax. Texas and Tennessee base their tax on formulas. Texas requires a franchise tax report every year, though most small LLCs under the threshold owe $0. See the Texas franchise tax report.
• A license tax. Wyoming charges an annual license tax tied to the report, with a minimum of about $60. See the Wyoming LLC annual report.

Annual report vs franchise tax: examples by state

These examples come from our state guides. Amounts and dates change, so check each state before you pay.

• New Mexico: no annual report and no franchise tax. See New Mexico LLC for non-residents.
• Missouri: no annual report requirement for most LLCs. See the Missouri LLC annual report guide.
• Wyoming: an annual report with a minimum license tax of about $60, due in your anniversary month.
• Colorado: a periodic report, currently $25 a year. See Colorado LLC for non-residents.
• Florida: an annual report of $138.75 due May 1, with a $400 late fee. See Florida LLC for non-residents.
• Delaware: no annual report, but a flat LLC tax due June 1. Our guide covers the increase to $400.
• California: the $800 minimum franchise tax plus a Statement of Information every two years.
• Texas: a franchise tax report due May 15, with no tax due for most small LLCs.
• New York: a biennial statement every two years. See the New York LLC biennial report.
• Michigan, Maryland, North Carolina, Tennessee, Louisiana, Wisconsin, Virginia and Oklahoma: each has its own report or fee. See our guides for Michigan, Maryland, North Carolina, Tennessee, Louisiana, Wisconsin, Virginia and Oklahoma.

Do you owe a franchise tax if your LLC has no income?

Often yes. Franchise taxes are usually not based on profit, so a quiet LLC can still owe a flat or minimum amount. The annual report also usually has to be filed whether or not the LLC earned anything.

Texas is the common exception: you must file the report, but many small LLCs owe $0 tax because they fall under the no-tax-due threshold.

Annual report vs franchise tax for non-residents: the two-state trap

For a non-resident owner, the formation state is only part of the story. If your LLC does business in another state and registers there as a foreign LLC, that state's fees can apply too.

For example, a Delaware LLC that operates in California may pay Delaware's annual tax and California's franchise tax and report fee. That can add up to well over $1,000 a year. So choose your state with your operating plans in mind, and read do you need to register your LLC in another state? and the best state to form an LLC from India.

Annual report vs franchise tax: how to avoid late fees

• Put every date in a calendar the day you form the LLC. See the US LLC compliance calendar.
• Know your anniversary month, because many reports fall due then.
• Keep your registered agent current. Notices go to the agent's address. See registered agents for non-residents.
• File early. Some states open the window months before the deadline.
• Save confirmations. Keep proof of every filing and payment.
• Track state-by-state duties if you operate in more than one state.

Late fees vary. Florida adds $400, Colorado adds $50, and Delaware adds a penalty plus interest, so a missed date can cost more than the filing itself.

State filings are not your federal filings

None of the above replaces your federal duties. A foreign-owned single-member LLC generally files Form 5472 with a pro forma Form 1120 each year, whichever state it is in. Read 5472 and 1120 for foreign-owned LLCs and bookkeeping for a US LLC. Indian reporting is separate again.

Mistakes to avoid

• Assuming "no annual report" means no yearly cost.
• Assuming a quiet LLC owes no franchise tax.
• Choosing a state without checking the yearly fees.
• Forgetting fees in the other states where you operate.
• Missing a date because notices went to a registered agent you stopped checking.
• Mixing up state and federal filings.
• Letting a dormant LLC run up fees. If you no longer need it, see how to close a US LLC from India.

How FormLLC can help

FormLLC helps Indian founders form US companies and stay compliant year after year, including annual reports and state fees. If you are unsure whether the annual report vs franchise tax rules in your state affect you, book a free consultation.

*This article is for general information only. State fees, dates and rules change. FormLLC is a business formation and compliance services provider, not a law firm, and does not provide legal or tax advice.*