Reinstate Corporation: Everything You Need to Know
If you need to reinstate corporation, there are several steps you must follow such as submitting a reinstatement application to receive active status.3 min read
3. Good Standing
4. What Happens When a Company Doesn't Stay in Compliance?
5. What Does the Reinstatement Process Involve?
If you need to reinstate corporation, there are several steps you must follow. An administratively-dissolved or revoked business entity must submit a reinstatement application to receive active status. Note this is not a financial statement. The application contains the most current data on file with the Division of Corporations and can be accessed online. The state in which a corporation is incorporated will determine the laws the corporation is subject to.
Theoretically speaking, a corporation is everlasting, but voluntary and involuntary actions on behalf of the corporate shareholders may cause the company to be declared inactive by the state. In order for a corporation to maintain its business license and registration, it must remain in good standing with its home state. Corporations must fulfill certain requirements each year to remain in compliance with the state laws.
Restoring a corporation to active status may involve penalties and fees; each state will vary in the process.
The Benefits of Reinstating
- Stay in compliance with laws
- Able to continue doing business
- Ability to re-establish a company that was at one time not in good standing with its state
The formation of a corporation requires an Articles of Incorporation to be filed according to state law. Although the forms may vary from state to state, most request that the business name is provided along with the purpose of the company. In addition, a request to list the number of shares of stock the corporation is authorized to use may be applicable.
The state the corporation was formed in is referred to as the corporation's domicile. The domicile has the authority to regulate the corporation. After registering a corporation, there are ongoing requirements that must be maintained in a timely manner to stay in compliance.
As previously mentioned, corporations must fulfill certain requirements each year to remain in compliance, or good standing, with the state laws. One state may require an annual report and fee to be submitted each year, while another might require an annual report, a state income tax return, and an additional franchise tax.
What Happens When a Company Doesn't Stay in Compliance?
When a corporation fails to remain in compliance due to things such as annual filings or failure to pay annual taxes, the corporation may be suspended by the state. Usually, after a set amount of time, also known as a grace period, if the corporation has not complied, the state will put the corporation on inactive status.
Many states allow shareholders or board of directors to place a corporation on inactive status if the corporation plans to suspend operations for a considerable length of time. When a corporation chooses to voluntarily become inactive, the state may proceed to place the corporation on inactive status.
When a corporation fails to remain in compliance, most states will automatically place the corporation on inactive status. The grace period allowed for a corporation to become compliant will vary from state to state. In Louisiana, a corporation has an extended time of three years before being placed on inactive status for failing to fulfill state requirements. However, in Georgia, the grace period is not so gracious, allowing only 60 days if a corporation fails to file the annual report.
What Does the Reinstatement Process Involve?
The reinstatement process can vary from state to state as well, as seen in Alaska, where no formal reinstatement is required. The corporation simply pays double the filing fees plus the total amount of fees for the time period the business was inactive.
Most states allow a reinstatement after a fee has been paid along with its annual obligations, and in most states, reinstatement is only available for a certain number of years after dissolution. Texas allows a corporation to apply for reinstatement at any time if the corporation was placed inactive due to tax reasons.
A reinstatement can take a considerable amount of time. The reinstatement application must be filed with both the Secretary of State and often the Department of Revenue or Taxation. It is important to research and examine the process and requirements subject to your home state when requesting a reinstatement.
If a business has been administratively dissolved for less than 12 months, it can be reinstated by making an online payment; this payment can be made using a credit card.
If you need help with knowing how to reinstate corporation, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.