LLC Reinstatement: Who Can Reinstate a Dissolved LLC?
LLC reinstatement is a complicated activity that may need clarification for someone unfamiliar with the process.
Navigating LLC reinstatements demands registered agents' expertise and a keen understanding of the involved steps.
Drawing from my experiences as a seasoned business expert and consultation with my colleagues, I will unravel the intricacies of reinstating dissolved LLCs.
This guide should help you understand what you need to reinstate your company successfully.
Quick Summary
- Only entities authorized by the state, including a registered agent, manager, or designee acting on behalf of the company, can reinstate a dissolved LLC.
- The reinstatement process often requires paying particular attention to details, such as filing and submitting the necessary papers and paying the required fees.
- According to the Score Foundation, factors such as poorly established payroll systems or premature resignation of the registered agent contribute to about 15-20% of business reinstatement delays.
- Taking a proactive approach helped me rectify the immediate issues facing my business and fostered a deeper understanding of the importance of ongoing vigilance in maintaining regulatory compliance.
Reinstating a Dissolved LLC
Only a person authorized by the state can reinstate an LLC.
However, that is not to say that anyone with access to the business paperwork and records may be able to get it reinstated for you.
While some states allow the filing agent or designated representative, others require specific individuals such as managers, members, or officers who are still part of the LLC.
I always advise my clients to delegate the responsibility to their registered agent to ensure a smooth process.
Read More: What Happens to Assets of a Dissolved Company
1. A Registered Agent
A registered agent is a person or business entity authorized by a company to receive legal services or processes on its behalf.
The registered agent may be an employee, officer, director, or another representative of the LLC who resides in the state and has agreed to serve as the company's agent to accept essential documents such as lawsuits and government notices.
In many states, a designated registered agent can file completed reinstatement forms.
The registered agent might be the same as or different from the one designated in the LLC's dissolution unless failure to maintain a registered agent was a factor in its termination.
2. A Designee Acting on LLC’s Behalf
A business owner can appoint a designee to act on behalf of the LLC. If a business owner establishes himself as a designee, he will represent his and the LLC's interests.
An individual reinstatement is necessary when only one member remains.
An example would include an LLC where all members have passed away or are otherwise incapacitated without any other successor to carry on the company.
3. A Manager
A manager of an LLC can reinstate the LLC if it has not been dissolved for too long.
A manager who has been suspended or removed from their position cannot be involved in any reinstatement process and cannot continue business operations without first getting reinstated by the other managers.
The Reinstatement Process
Suppose a limited liability company has been dissolved for three to five years (depending on the state). In that case, it can be reinstated promptly by filing a completed reinstatement form and submitting all necessary papers (left-over annual reports).
I ensure I have all the necessary paperwork (annual report) before filing any reinstatement. Other than that, I always recommend scrutinizing possible reasons for falling out of compliance.
As suggested by Score Foundation, some possible reasons, though subtle, may include the poor establishment of the payroll system or the resignation of the registered agent too soon than expected [1]. According to their findings, these factors contribute to approximately 15-20% of cases of business reinstatement delays.
You will also need to perform a business name search because there is a possibility that the name of your former LLC has been taken in the meantime.
On top of this completed form, a fee might also need to be paid. You can pay the filing fee through a money order or a credit card.
You can submit payment and paperwork through certified mail or a courier and mail it to the same mailing address you used to complete the form.
The LLC can regain its active status if the process is seen throughout.
Remember that only LLCs that are administratively dissolved can be reinstated, unlike those voluntarily dissolved by the owners.
The reinstatement process differs from state to state, so contacting the Secretary of State beforehand is best.
Most states will only allow certain authorized persons or entities to reinstate an LLC with an appropriate state agency, whether you have a limited partnership, a corporation, or an LLC.
"The timeframe for hearing back on your reinstatement request can vary from 1-2 business days to 2 weeks, but you have the option to expedite the process by paying a fee and receiving a response within 24 hours if offered by your state."
- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter
Reasons for LLC Dissolution
There are two main types of LLC dissolutions: voluntary and involuntary (administrative dissolution).
Voluntary dissolutions happen when the company members agree that they want to dissolve their LLC.
Involuntary dissolution happens when a limited liability company is in bad standing with the state and an outside party forces an end to the company, such as a court order or administrative proceeding by another government agency like the IRS or Department of Labor (DOL). According to the National Association of Secretaries of State (NASS), involuntary dissolutions account for approximately 10-15% of all LLC dissolutions.
Every business entity has to be in good standing with the state.
The reasons they fail to maintain this status vary, from not filing the annual report (either for the calendar year or report year), maintaining a registered agent, failing to submit the right paperwork, and not paying franchise taxes or required state fees.
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FAQs
How Much Does It Cost to Reinstate an LLC?
The reinstatement of an LLC costs as little as $20, but it is good to be aware that the amount may vary depending on where you are reinstating and the taxes or reports you still need to file.
How Long Does It Take To Reinstate an LLC?
It takes a few days to six weeks or longer to reinstate an LLC. The duration will depend on whether your documentation is in order and ready for submission and whether additional forms are required.
Can a General Partner Reinstate a Limited Partnership?
Yes. General partners can reinstate limited partnerships within five years of dissolution, but the period may differ depending on the state. The general partners must file a certificate of reinstatement with the Secretary of state to reinstate limited partnerships.
Reference:
- https://www.score.org/resource/blog-post/tips-reinstating-a-small-business
