Annual Report vs Franchise Tax: What's the Difference?
Last reviewed:Two different deadlines. Two different agencies. Two different consequences. The annual report and the franchise tax routinely get conflated, and the conflation is expensive: you can pay the franchise tax in full, on time, and still lose your LLC’s good standing because you missed an annual report sent to a completely different state office.
This guide covers what each of these actually is, who runs them, why states bother to have either, and which states require which. Examples come from the states we cover; the principles apply broadly.
What an annual report is
An annual report (or its state-specific equivalent — Statement of Information, Periodic Report, Public Information Report, Annual Registration) is an information filing. Its purpose is to keep the state’s record of your LLC’s managers, members, agent for service of process, and addresses current. The filing usually goes to the Secretary of State or whichever agency runs business filings in your state.
The annual report is rarely about money. The fees are typically small — $7 in Pennsylvania, $20 in California, $25 in Colorado, $50 in Georgia, $70 in Washington, $75 in Illinois and New Jersey, $200 in North Carolina. The point of the filing is the data, not the revenue.
What it accomplishes:
- The state can serve legal process on your LLC because it has a current registered agent on file.
- Other businesses, banks, and courts can look up who currently runs your LLC.
- The state has a real record of which entities are still active, so it can dissolve the ones that aren’t.
What a franchise tax is
A franchise tax is exactly that — a tax. It is paid to the state’s tax authority (Department of Revenue, Comptroller, Franchise Tax Board, depending on the state). Its purpose is to fund state government in exchange for the privilege of being incorporated in that state. The amount can be flat, revenue-based, capital-based, or calculated on something stranger like “taxable margin.”
Franchise tax structures vary widely:
- Flat fee: Delaware charges $300 a year for every LLC, regardless of size. No income calculation, no formula.
- Flat minimum plus revenue-based scaling: California charges every LLC an $800 minimum annual tax, plus an additional LLC fee that scales with California-source income above tier thresholds (per Form 568 instructions).
- Calculated on a margin or rate: Texas computes franchise tax on taxable margin at 0.375% (retail/wholesale), 0.75% (other), or 0.331% under the EZ Computation, with no tax owed below an annualized total revenue threshold ($2,650,000 for 2026–2027 reports).
- Different tax with a similar feel: Ohio’s Commercial Activity Tax is technically a gross-receipts tax, not a franchise tax, but for LLC owners the practical question is the same: above what threshold do I owe something to the state Department of Taxation?
The four quadrants
Every state falls into one of four categories. The categories explain why your specific obligations look the way they do.
1. Annual report + franchise tax
Both filings, both deadlines. You file one return for management information, another (or several) for the tax.
| State | Annual report | Franchise tax / equivalent |
|---|---|---|
| California | Statement of Information (biennial), $20, anniversary month | $800 minimum + LLC fee, FTB, due April 15 |
| Texas | Public Information Report, due May 15 (filed with Comptroller, not SOS) | Franchise tax, same May 15 filing |
Texas is interesting here because both filings go to the same agency (the Comptroller), so they feel like one obligation even though they are technically two.
2. Annual report only
The state has no franchise tax for default-taxed LLCs. The annual report is the recurring obligation.
| State | Filing | Deadline | Fee |
|---|---|---|---|
| Florida | Annual Report | May 1 | $138.75 |
| Georgia | Annual Registration | April 1 | $50 |
| Illinois | Annual Report | First of anniversary month | $75 |
| North Carolina | Annual Report | April 15 | $200 |
| New Jersey | Annual Report | Last of anniversary month | $75 |
| Pennsylvania | Annual Report | September 30 | $7 |
| Washington | Annual Report | Last of anniversary month | $70 |
States in this column may still have an income or gross-receipts tax that affects you — Pennsylvania has a personal income tax that flows through to LLC owners, Washington has B&O on gross receipts, Florida has corporate income tax for C-corps but not for default-taxed LLCs. None of these are “franchise taxes” in the structural sense, but they may still be obligations you owe.
3. Franchise tax only (no annual report)
A small group of states. The tax authority handles the recurring obligation, and the Secretary of State asks for nothing on a fixed schedule beyond keeping a registered agent on file.
Delaware is the canonical example: $300 annual LLC tax due June 1, paid to the Division of Corporations. There is no annual report. Penalty for missing the tax is a $200 flat penalty plus 1.5% interest per month — and continued non-payment leads to cancellation of the LLC.
4. Neither (sort of)
A handful of states impose neither a recurring annual report on LLCs nor a franchise tax on default-taxed LLCs. Arizona is one — the Arizona Corporation Commission does not require LLCs to file an annual report, and Arizona has no franchise tax. Your obligations are reduced to maintaining a registered agent, keeping your federal tax filings current, and paying the state’s regular income or transaction taxes if they apply.
Ohio is similar at the SOS level — LLCs do not file an annual report — but the Commercial Activity Tax kicks in above $6,000,000 in Ohio gross receipts, which functions like a franchise tax for larger LLCs.
Why the distinction matters in practice
When something goes wrong with your LLC, the agency that flagged it is the agency you have to deal with to fix it. That sounds obvious, but it has real consequences:
- Missed annual report → Secretary of State problem. The fix is filing the missed report (and any subsequent delinquent ones) plus the late penalty, then waiting for the SOS to update your status. Your tax record is unaffected.
- Missed franchise tax → tax authority problem. The fix is paying the tax plus penalty plus interest, and in many states the SOS will mirror the suspension on its end until the tax authority clears it. In California specifically, the Franchise Tax Board can suspend an LLC for non-payment of the $800 tax even when the Statement of Information is current.
- Missed both → both agencies need to be cleared. Reinstatement involves both queues, and the order can matter — most states require the tax authority to certify good standing before the SOS will reinstate.
When the deadlines are the same vs. different
A common mistake is assuming the annual report and the franchise tax are due on the same date because both are “annual.” They sometimes are, often aren’t.
Same date: Texas (May 15 for both, both filed with the Comptroller).
Different dates: California (Statement of Information on the LLC’s anniversary month, $800 tax on April 15 calendar-year), Delaware (no annual report; $300 tax on June 1).
Mixed: a state where the annual report uses anniversary dating but the franchise tax uses a calendar deadline — so the same LLC has two distinct compliance dates that move differently year over year. New Jersey is one example: anniversary-month annual report, plus a partnership filing fee due April 15 for multi-member LLCs.
If your state has both filings and you’re trying to remember which is when, the deadline checker computes the next occurrence of each from your formation date.
What this means for staying compliant
The practical implication of all this: when you set a calendar reminder, you actually have to set the right number of reminders.
- One state with one filing: one reminder a year (or biennially in California).
- One state with both: at least two reminders — one for the SOS filing, one for the tax filing.
- Multi-state LLCs: one for each filing in each state, including foreign registrations.
We don’t run a reminder service — that’s not what StayOnFile is — but the deadline checker will give you the next occurrence of each filing for each state you operate in. From there, you put it in whatever calendar you actually look at.
For a quick orientation to the rest of these terms (good standing, reinstatement, registered agent, foreign registration), see the glossary. For state-by-state specifics, the LLC hub lists every state we currently cover.
Frequently asked questions
Are an annual report and a franchise tax the same thing?
No. An annual report is an information filing with the Secretary of State (or equivalent) that keeps the state's record of your LLC's managers, agent, and addresses current. A franchise tax is a tax on the privilege of being incorporated in a state, paid to that state's tax authority. They are administered by different agencies and have different consequences if missed.
Does every state have both?
No. Most states have one or the other; a few have both, and a few have neither. Delaware has a franchise tax for LLCs but no annual report. Florida has an annual report but no franchise tax for default-taxed LLCs. California has both. Arizona has neither for LLCs (other than maintaining a registered agent).
If my state has both, are the deadlines the same?
Sometimes, but not always. In Texas, the Public Information Report and the franchise tax report are filed together with the Comptroller, both due May 15. In California, the biennial Statement of Information goes to the Secretary of State on its own schedule, while the $800 annual franchise tax is due to the Franchise Tax Board separately on April 15 (calendar-year filers).
What happens if I miss the annual report but pay the franchise tax?
You typically lose good standing with the Secretary of State, even though your taxes are current. Lost good standing makes it hard to enforce contracts, qualify in other states, or open a business bank account. Most states impose a separate late penalty on the missed annual report and eventually move toward administrative dissolution if the report stays unfiled.
What if I file the annual report but skip the franchise tax?
You stay current with the Secretary of State but accrue tax penalties and interest with the tax authority. In states like California and Delaware, continued non-payment leads to suspension or forfeiture of the LLC, the same end-state as missing the annual report — just through a different door.
State pages referenced in this guide
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