Key Takeaways

  • Reinstatement in Illinois requires filing Form LLC-35.40 and submitting all missed reports and fees.
  • Involuntary dissolution in Illinois occurs due to missed filings, nonpayment of fees, or legal violations.
  • Unlike voluntary dissolution, administrative dissolution allows for unlimited time to reinstate.
  • An LLC's business operations, credibility, and legal standing are affected during dissolution.
  • Illinois does not require tax clearance to reinstate an LLC, but all taxes and reports must be current.
  • Legal counsel may be beneficial when navigating reinstatement or dissolution proceedings.

Wondering how to reinstate involuntarily dissolved LLC Illinois? When an LLC becomes delinquent, reinstatement is the process that restores it to good standing. The number of steps required to reinstate an entity depends on what caused the delinquency. Reinstating a domestic LLC in Illinois begins with completing and filing the Reinstatement Following Administrative Dissolution form, which is also called the LLC-35.40.

The LLC-35.40 form must be filed in duplicate by mail, or you can deliver it in person to the office of the Illinois Secretary of State. Along with the form, you must include all of your LLC's delinquent annual reports and the fees that are due.

Fees for Filing for Reinstatement Following Administrative Dissolution

There are some fees associated with filing to reinstate an involuntarily dissolved LLC in Illinois, including:

  • A $200 filing fee plus all past-due annual reports and fees must be filed at the same time as your Reinstatement Following Administrative Dissolution form.
  • A $150 filing fee must be paid along with the Articles of Organization.
  • There's no extra fee for regular processing, which takes one week to 10 days.
  • A $100 fee is required if you want expedited processing in person. This ensures you get 24-hour processing as long as all of your past-due reports and fees are properly attached to the form.

Administrative or Voluntary

The difference between an administrative dissolution and a voluntary dissolution is that, in Illinois, if an LLC has been administratively dissolved, that LLC can apply for reinstatement at any time. No time limit is established from when the Illinois Secretary of State would require you to completely start over with your LLC. If you voluntarily dissolve your LLC, however, you can never apply for reinstatement. In that case, your only option is to start over.

Causes of Involuntary Dissolution in Illinois

In Illinois, involuntary or administrative dissolution typically occurs when an LLC fails to comply with certain state requirements. The most common causes include:

  • Failure to file annual reports: LLCs must file an annual report with the Secretary of State each year by their anniversary date. Missing this deadline can trigger dissolution.
  • Nonpayment of required fees: Annual report fees and franchise taxes must be paid on time. If fees remain unpaid, the LLC may be dissolved administratively.
  • Noncompliance with registered agent requirements: If an LLC does not maintain a registered agent or fails to update changes, it risks dissolution.
  • Legal or regulatory violations: In rare cases, an LLC may be dissolved if it violates state laws or regulations.

LLCs that fall out of compliance will typically receive a notice from the Secretary of State. If the issues aren't resolved, the company will be administratively dissolved.

One Thing at a Time

Allowing your LLC to be dissolved and then having it reinstated isn't a way to change your registered agent. After your LLC reinstatement has been processed in the state of Illinois, you can then file a form called the Statement of Change of Registered Agent. The only thing affected by the LLC's application for reinstatement, after it's been dissolved administratively, is its reinstatement. Changing the LLC's members or managers isn't an option at the same time while filing for the reinstatement of your LLC in Illinois.

Timeline for Reinstatement After Dissolution

Illinois does not impose a strict deadline for reinstating an involuntarily dissolved LLC, making it more flexible than many other states. However, acting sooner rather than later helps minimize:

  • Accrued penalties and interest
  • Gaps in liability protection
  • Damage to business reputation

Once all delinquent reports and fees are submitted, along with the Reinstatement Following Administrative Dissolution (LLC-35.40) form, the reinstatement is typically processed within 7 to 10 business days for standard filing, or within 24 hours for expedited filings.

Note that if the LLC has been dissolved for a long time, it may need to verify that its name is still available before reinstating.

Tax Clearance

There's no limit placed on the number of annual reports that an LLC can miss and still be revived in Illinois. The agency to contact is the Business Services Department of the Illinois Secretary of State. Their phone number is 217-782-6961. A number of states require a dissolved LLC to get tax clearance or tax good standing notation before reinstating the entity.

Tax clearance is a form of written proof that your LLC has paid all overdue and past due taxes with the state's tax agency. This is typically the Department of Revenue or Department of Taxation. Depending on the state that your LLC is located in, getting tax clearance can take several weeks or even several months.

Avoiding Future Dissolutions

To prevent another involuntary dissolution in Illinois, LLCs should adopt the following best practices:

  1. Calendar important filing dates: Mark the anniversary date of the LLC to ensure timely annual report filings.
  2. Maintain a reliable registered agent: Ensure the registered agent’s contact information is always up to date.
  3. Pay fees on time: Set reminders for franchise taxes and other recurring obligations.
  4. Keep accurate records: Maintain corporate documents, meeting minutes (if applicable), and updated member/manager information.
  5. Use compliance tools: Consider using automated filing services or software to monitor compliance tasks.

Staying compliant ensures the LLC retains good standing and uninterrupted legal protection.

Loss of Credibility

If a business has lost good standing or has been administratively dissolved, there may be state penalties, fees for non-compliance, and other fines that must be paid before the business can be reinstated. Businesses' transactions with banks, government agencies, and licensing bureaus, as well as their contractors, can end up being delayed. Those delays can cause the business to lose credibility. The owners might even face personal liability in these circumstances.

Under Section 12.40, a domestic corporation can be reinstated after administrative dissolution after the date the Certificate of Dissolution was issued by the Secretary of State once the company has:

  • Filed the application for reinstatement.
  • Filed all reports that are due and those that are coming due soon with the Secretary of State.
  • Paid all corporation fees, penalties that are due, fees that are coming due, and franchise taxes to the Secretary of State.

When the corporation that's been dissolved has met all the provisions, as established by the Secretary of State of Illinois, the LLC's corporate existence will then be ruled to be in a continued state without any Interruption from the date the certificate of dissolution was issued.

Legal and Business Risks of Involuntary Dissolution

Involuntary dissolution carries several legal and operational risks, including:

  • Loss of limited liability protection: Members may become personally liable for the LLC’s obligations if they continue business activities after dissolution.
  • Contractual issues: Clients, vendors, and financial institutions may be unwilling to do business with an inactive or dissolved entity.
  • Tax complications: Operating while dissolved can complicate tax filings and may result in fines or audits.
  • Administrative barriers: Reinstatement may be delayed if the business has fallen severely behind on compliance.

Staying proactive with compliance requirements is essential to avoid dissolution and its consequences.

Frequently Asked Questions

1. What is involuntary dissolution in Illinois? Involuntary dissolution occurs when the state dissolves an LLC for noncompliance, such as failing to file annual reports or pay fees.

2. How do I reinstate an involuntarily dissolved LLC in Illinois? You must file Form LLC-35.40 with the Secretary of State, submit all past-due annual reports, and pay associated fees.

3. How long do I have to reinstate an LLC in Illinois? There is no time limit for reinstating an administratively dissolved LLC in Illinois, but earlier action is recommended.

4. Can I change my registered agent while filing for reinstatement? No, changes to the registered agent must be filed separately after the LLC is reinstated.

5. Do I need tax clearance to reinstate my Illinois LLC? Illinois does not require a tax clearance certificate, but all delinquent taxes and reports must be brought current.

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