Admin Dissolution for Annual Report Definition
Administrative dissolution is typically the first step in terminating a company's right to do business permanently.3 min read
2. Reasons for Administrative Dissolution
3. Remaining in Compliance
5. Florida Annual Report
Updated July 13, 2020:
Admin dissolution for annual report definition is the temporary removal of a company's ability to conduct business in the state of registration because they failed to file the required annual reports or follow other legal guidelines. Administrative dissolution is typically the first step in terminating a company's right to do business permanently.
Creating an LLC
The laws for establishing a limited liability company are distinct in each state. In most cases, you need to file a document called articles of organization with the Secretary of State. This asks for basic information about your business (including the official legal name and address) and the name and contact information for your registered agent. This individual is authorized to accept legal service of process for your LLC. Some states require LLCs to file an annual or biannual informational document. This is a requirement to remain an active business entity.
Reasons for Administrative Dissolution
The Secretary of State or business office in each state is responsible for making sure that entities remain in compliance with regulations. Businesses that do not comply are subject to administrative action.
- Failing to file state-required reports, including California's statement of information and Texas's franchise tax report, most often leads to administration actions up to and including dissolution.
- A limited liability company (LLC) can be dissolved if a registered agent is not maintained.
- All states require companies to file an annual report. This yearly statement must be submitted to the Secretary of State by the stated deadline. The report must include the legal name of the company, office address, registered agent information, and list of members, managers, directors, or officers. Failure to submit this report is grounds for dissolution.
- Administrative dissolution may be pursued if you do not remit funds for a dishonored check or fail to pay other required fees.
Remaining in Compliance
Many small business owners prefer to establish an LLC because of the tax advantage and ease of operation. Although LLCs carry fewer administrative requirements than corporations, you'll still need to comply with some state laws to remain a registered entity.
If your LLC or business entity is not in good standing, you will receive a letter from the associated state agency that indicates the required actions to take. This communication will also indicate the fine or penalty associated with failure to comply and additional actions that will be taken if regulations are not met. This typically includes a suspension first, which opens members to personal liability. Administrative dissolution or termination usually follows.
When you need to update the names of your managers, members, officers, and/or directors, it can be done directly on your annual report form or with an attached document. Some LLCs, partnerships, corporations, and trusts can request a Statement of Change of Registered Agent or Principal Office Address for this purpose. In most states, the Secretary of State office mails the annual report to your business address on record.
If the business entity may be reinstated, this is typically predicated upon ongoing compliance with legal requirements as well as payment of outstanding penalties and fees.
In most states, LLC laws allow this type of entity to follow procedures for reinstatement to good standing. Some states, including Florida, allow your LLC name to be used by another company if it has been administratively dissolved for more than a year.
In Georgia, businesses that are dissolved must begin liquidating assets and wrapping up business matters right away. Once these steps are taken, the entity's registration is voided.
Florida Annual Report
In Florida, business entities must submit their annual reports to the Secretary of State by May 1 every year. Companies who missed this deadline are subject to a $400 fine. This must be paid by the third week of September along with the annual report submission to avoid administrative dissolution.
When your Florida entity is administratively dissolved, it continues to exist but is not allowed to conduct business except to liquidate assets and notify creditors. In addition, an officer, agent, or director will be held personally responsible for outstanding business debts and obligations. When the corporation is reinstated, this liability is lifted.
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