What Is Annual?

The term "annual" refers to an event that occurs once a year. In the financial industry, annual events or reports may include taxes, shareholder meetings, and corporate filings such as a 10-K statement. These types of announcements are in contrast to those reported quarterly, such as a 10-Q or dividend payments.

Other significant events that occur on an annual basis include annual fees and annual compounding events.

Key Takeaways

  • The term "annual" refers to an event that occurs once a year. In the financial industry, annual events or reports may include taxes, shareholder meetings, and corporate filings such as a 10-K statement.
  • Just like individuals, businesses and corporations also file income tax returns on an annual basis before the filing deadline in mid-April.
  • Publicly traded companies must also file annual reports with the U.S. Securities and Exchange Commission (SEC).

Understanding Annual Meetings

The most crucial annual event for a company is its shareholders' meeting. These meetings are required by law for publicly traded firms. Investors usually receive an invitation that announces the date, agenda, and scope of the meeting. Shareholders typically elect a board of directors at these annual gatherings, revise the most pressing matters to the firm, and any other agenda items requested by shareholders. Shareholders also choose an accounting firm to review the company's bookkeeping practices.

Any shareholders who cannot attend in person usually vote by proxy, either through email or via U.S. mail. Votes taken at a shareholders' meeting are only binding if a quorum of shareholders is physically present at the meeting. An administrative assistant usually records the minutes of the meeting so shareholders can review the business that occurred after the meeting.

Annual Tax Filings

Just like individuals, businesses and corporations file income tax returns on an annual basis before the filing deadline in mid-April. The type of tax paid depends on the structure of the business.

Corporations pay taxes based on income by making regular payments once per quarter, but any adjustments occur when the annual return goes to the Internal Revenue Service (IRS) in April. Some corporations must pay excise taxes on fuel, transportation, and manufacturing every year.

Annual Reports

Publicly traded companies must also file annual reports with the U.S. Securities and Exchange Commission (SEC). These reports became mandatory after the stock market crash of 1929 to give transparency to the health and overall performance of a company. Annual reports give investors a chance to research a corporation before deciding to buy stock.

The SEC receives a company's annual report as part of Form 10-K. Filings and strategy sessions that occur once a year typically involve a level of forecasting, with a company identifying what it expects to earn or what it expects to do over the course of the next 12 months. The company may also keep investors up to date with progress through quarterly reports.

Annual reports include several sections. Financial highlights delve into a company's revenue, income, sales, acquisitions, and expenses. The report contains hard numbers, statistics, infographics, and analysis that give shareholders and potential investors a guide for what happened over the past year and what to possibly expect in the coming year. Annual reports and shareholder meetings normally occur congruently and after the end of a company's fiscal year.