Sometimes, a small business accidentally falls out of compliance with the state. Let’s use the example that your business forgot to send in its annual report. Maybe you completely spaced about the deadline, not realizing just how much hot water your business is in because of it.
Neglecting to file an annual report in time, or forgetting to comply with another state requirement for your business, may place your company in bad standing. If no action is taken to get it back into good standing, the state may dissolve the business.
However, I do have good news for involuntarily dissolved businesses. These lapsed companies may return and fully operate again by filing for a reinstatement. Let’s take a look at what a reinstatement is and how your small business, if it was formerly dissolved, can get back up and running.
What Does It Mean To Reinstate A Business?
When a business has been dissolved, it is considered to no longer be in operation by the state. Businesses that file for reinstatement are able to restore the company to active status and good standing. Essentially, reinstatement takes a small business back to where it was before it fell out of compliance.
What were the grounds for dissolving your LLC or corporation? While there are various reasons for how a small business can fall into bad standing, these tend to be the most common ones.
Forgetting to file annual reports on time.
Neglect in paying the filing fee for an annual report.
Writing a check for a filing fee that bounced and was never replaced.
Forgetting to pay franchise taxes.
Did you review this list and still aren’t sure why your small business was dissolved? Contact your local Secretary of State for the answer, so you’re better equipped to file for reinstatement.
2. Prepare a reinstatement application
There are a few ways you can get this form. You may contact your local Secretary of State for a reinstatement application and to ask if there are any additional documents necessary to file. Or, you may have a representative of the dissolved business write a letter requesting reinstatement.
As you prepare to file for reinstatement, keep in mind that you’ll need to do more than submit the paperwork. Your business will be expected to rectify the problem that caused it to fall into bad standing. Let’s use the example that you forgot to file your annual report. You would need to file a reinstatement application and a delinquent form.
What if you forgot to pay a specific fee? That takes us to bullet point #3…
3. Pay any and all outstanding fees
Some dissolved businesses may only owe a small fee. Others might have incurred higher penalties. The amount a small business needs to pay in fees — reinstatement plus any delinquencies — will ultimately vary depending on their state of incorporation. If you are unsure about how much you owe, get in touch with the Secretary of State to ensure you’re paying the proper amount. (Don’t let the check bounce this time either!)
When a business is dissolved, all of the protections and tax benefits it received after incorporating or LLC are lost with the company. If you want to get back to doing business again, it’s key that you file for reinstatement quickly. Let your past mistakes be a lesson not to fall out of compliance again and allow your doors to stay open for business — for good.