Should your business ever become inactive for an extended period of time, or fail to address the regular compliance requirements placed upon it, it may be necessary for you to apply for reinstatement with your state of incorporation. The reinstatement process brings your company back into “good standing” status, and ensures that you are operating in complete accordance with the law. The most common reason that reinstatement becomes necessary is when a business is found to have ignored its required annual report or franchise tax filings.
Reinstatement will likely be necessary if your company fails to observe the compliance requirements placed on it, such as annual report filings, tax payments, or past due state fees. A consistent failure to address these formalities can lead to a suspension of your company’s right to conduct business, or even a forced dissolution.
If your company falls into “bad standing” with the state, it may be required to reinstate itself before continuing its operations, or even voluntarily dissolving. In some states, reinstatement is also a potential solution to reforming a previously dissolved organization.
Consequences of non-compliance
Falling out of good standing with your state can have serious consequences for both your business and your personal finances. A business that has been found to be in bad standing, and fails to reinstate itself in a reasonable time frame, can have its business license revoked, or even be forced to dissolve. In some cases, a company’s limited liability status can be revoked as well, exposing its owners’ personal finances to seizure to satisfy the company’s debts.
There are some steps that must be taken in order to ensure that a company can successfully be reinstated. Here are some general guidelines to follow as you work to get back in good standing:
- Identifying and documenting any preexisting compliance issues.
- Calculating and documenting any outstanding fees or taxes due to your state.
- Obtaining any forms that will need to be completed on behalf of your business.
- Assistance with completing any necessary forms, and a full audit of them before official filing.
- Submitting each form to the appropriate state agency.
- An official notice of your company’s completion of the reinstatement process.
Stay in compliance
Though they vary state-to-state every business must comply with certain compliance tasks. Don’t go through the trouble of reinstatement just to end up back in bad standing with the state. Make sure that you are aware of your yearly compliance responsibilities. As mentioned above, the necessary tasks depend upon your state of incorporation. Keep in mind that you will also need to consider any ongoing requirements in each state you are foreign-qualified in. Also, there are specific requirements on different business structures. The yearly tasks for an LLC will be very different from the yearly tasks necessary to keep a C corporation compliant.
Swyft can help!
Don’t be overwhelmed by the reinstatement process. One of our experienced agents can walk you through the steps, and connect you with our streamlined reinstatement service. Contact us today!