Compliance with state requirements is an important responsibility that every limited liability company (LLC) owner should know. Your company has to submit the required documents and pay for the corresponding fees on or before the deadlines. However, businesses that fail to file the required paperwork or pay fees may fall into bad standing or inactive status.
Various reasons can lead to a company falling into bad standing or inactive status with the state. Typically this will occur when a company fails to file annual reports, pay filing fees or state taxes. For most companies it is because of innocent mistakes. They did not know the state had reporting or tax requirements, the form may have been misplaced, the check bounced or they simply missed the deadline and forgot to file. Most states give a grace period to file the required paperwork, however once that passes the company usually becomes dissolved by the state.
When this happens, do not lose hope. You do not have to close your business. You can still reinstate your LLC.
What It Is
Reinstatement refers to the process that a non-compliant company has to go through to get back in good standing with the state. When the state dissolves an LLC, it revokes the status of the company. Thus, it loses the benefits that come with operating a business as an LLC.
When you reinstate your LLC, you resolve all outstanding compliance issues. At the same time, you submit the necessary forms and pay for corresponding fees. Properly completing the process helps your business regain all the advantages that come with being an LLC. You can also start entering new contracts and continue your operations without having to worry about the legality of your activities.
What To Do To Reinstate Your LLC
In most states, companies will have enough time to address any issues before the dissolution takes effect. During this time, you will have to resolve any underlying reasons why the state put the company in bad standing. However, once the dissolution takes effect, you will need to go through the reinstatement process so that the operations of your LLC remains legal.
First, find out the laws that your state implements for the reinstatement of an LLC. Make sure that it allows the reinstatement of a dissolved company. Then, figure out the steps that you need to take. You can check out the website of the state agency in charge of such cases. It is often the office of the Secretary of State.
Steps To Take To Reinstate Your LLC
Once you understand each step, prepare all the necessary documents. You should make sure you take care of things immediately. Each state has specific regulations to follow:
- Find out the reason for your company’s bad standing. Even though your LLC has already been dissolved, it is still important to know the reason why it fell into bad standing. Once you identify what is wrong, you can start filing for reinstatement immediately. If you have no idea why the state involuntarily dissolved the company, contact the Secretary of State or the agency that is in charge of business compliance. Ask them the specific reason for your bad standing.
To give you an idea, here are some of the common reasons that lead to this situation:
- Your LLC did not pay the necessary taxes on the date that the state has set.
- The registered agent that you appointed resigns quickly without providing important documents.
- Your company has not filed annual reports for years.
- You have unpaid annual report fees for several years.
- File the formal paperwork. The reinstatement process includes the submission of paperwork to a certain agency, which is usually the Secretary of State. When the state involuntarily dissolved your company, your business loses any legal and fiscal protection.
You may be wondering where to start. Well, all you have to do is to find out what type of paperwork you need. It may vary depending on the state where you organized your company. Most states have readily available forms for the application for reinstatement. Meanwhile, some states also require a request letter from a company representative.
Remember when we said that knowing why your company got put in bad standing status was crucial? Well, this is where you can use that information. The documents you will need to submit will depend on it. For example, the state dissolved your LLC because you did not file annual reports on time. You may have to submit a delinquent form along with the application for reinstatement form.
- Settle all outstanding fees. Aside from submitting the necessary forms, you also need to pay for all outstanding fees. The cost will depend again on the state. The common payments that you need to take care of are the filing fee for the application for reinstatement form and the penalty fees for compliance obligations. You can check the exact amount with the appropriate agency.
How DoMyLLC Can Help
You have to reinstate your LLC if you want to conduct business legally. However, it takes effort and time. Additionally, you also need to have good attention to detail to make sure everything is in order. This process, along with the company duties, can be a bit overwhelming, especially if you have never experienced it before.
Fortunately, there are service providers that assist business owners like you. If you need help in completing the reinstatement process, DoMyLLC is the right partner for you. With our help, you also do not have to conduct research. Our team can prepare the paperwork, review documents, and submit them to the appropriate agency.
Reactivating the status of your LLC also does not have to be the end of a partnership. We can help your company prevent another dissolution case. We also offer other relevant services, such as report filings, annual report reminders, and registered agent services. This way, you will have an expert that will take care of the compliance side while you focus on running and growing your business.
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