Reinstatement is what you have to do to get your business out of an inactive or bad standing with the state. And this time of the year, we’re getting tons of requests and questions about reinstatements from people who let their corporation or limited liability company to lapse, but want to get things rolling again before we get too far into 2015.
Reinstatement Luckily, the reinstatement process is pretty straight-forward, though depending on the reason for the lapse, it can get a little pricey.

How does a company become inactive, or get put in bad standing?
There are a few different ways this can happen. But one of the most common reasons behind a bad-standing is simply the business’s owner forgetting to pay their annual fee. Most states require corporations and LLCs to file an annual, or bi-annual, report, and send in a fee. If you forget to do that, your company can lapse into bad standing. Bounced checks or misplaced forms can also stick your company in bad standing, as can an unpaid tax bill.

How do you reinstate a corporation or LLC?
Most states offer either an application for reinstatement, or ask that a representative of the company write a letter requesting reinstatement. Along with filing that, you’ll have to rectify whatever problem caused the bad standing in the first place. Sometimes that just means paying a small fee, while other times that small fee can balloon with penalties and delinquency costs. Normally, the sooner you reinstate your business and get in compliance with the state, the better.

Why would you want to reinstate a business?
For the same reasons you formed a corporation or limited liability company in the first place. When you let your business structure lapse, it’s only a matter of time before the state dissolves the business, effectively removing all the protection and tax benefits that can come with incorporating, or forming an llc. Further, if you continue to operate and advertise as an LLC or corporation without actually being one, you could land yourself in hot water. That’s why the best thing you can do for your business is to keep up with your state fees and compliance requirements.

Interested in reinstating a company in bad-standing? Not sure what went wrong? Need help figuring out how to reinstateme? Just give us a call at 1-877-692-6772!

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