Are Businesses Required to Publish Annual Reports?
Public companies that sell shares to investors must file annual reports. These reports are published and shipped to shareholders. Potential investors can also obtain copies before investing. In addition, private companies often file annual reports with private owners. Nonprofit companies must also file annual reports to assure the government that operations are lawful.
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Securities Exchange Act of 1934
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During the Great Depression, the U.S. government sought to remove risk from Wall Street to avoid crashes like the one that occurred in 1929. To give investors a better handle on company performance, the government enacted the Securities Exchange Act of 1934. This Act requires companies that issue stock to file annual reports. These reports are known as 10-K reports. Section 12 of the Act states that the annual report must be filed each year. In addition, annual reports must be filed within specified time periods after the end of the company's fiscal year.
Annual Report Requirements
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Companies are required to disclose a tremendous amount of information in annual reports. Companies must include income statements, balance sheets, statement of owner's equity and cash flow statements for each of the last three years. These statements must be audited by outside accounting professionals. In addition, the statements must be consolidated. Finally, the key officers of the company -- the president, chief financial officer and a majority of the board of directors -- must sign the annual report testifying the validity of the numbers.
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Deadlines
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In the past, all public companies were required to file annual reports within 90 days of the end of the fiscal year. In 2002, the government modified reporting rules by company size. Companies with $75 million to over $700 million in publicly owned shares now must file within 75 days of the end of the fiscal year. Companies with less than $75 million in publicly held shares must file within 90 days.
Charitable Organizations
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In addition to public companies, certain charities are also required to file annual reports to the government. The IRS requires charitable organizations to fill out annual reports within five months of the end of the company's fiscal year. In addition, if the charitable organization has employees earning more than $1,500 in a quarter, then the organization must withhold taxes and IRS Form 941 must be sent to the IRS for each employee.
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