Limited liability companies are business structures in the United States, where the owners are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that bring in both the characteristics of a corporation along with those of a partnership or sole proprietorship.
Why Would an LLC Dissolve?
An LLC may dissolve either because it does not wish to do business any longer, or because it did not pay its fees and fell out of compliance. In this case, you will need to reinstate your LLC.
There are a few reasons why you may need to reinstate an LLC, either because it was voluntarily dissolved by you, or involuntarily dissolved by the state (also known as administrative dissolution).
Reasons an LLC May Dissolve
There are a variety of reasons why an LLC may dissolve and no longer exist. New businesses are created every day. Unfortunately there are businesses that shut their doors for good every day too.
There are a variety of factors that affect this decision. Whether it’s for legal matters or because the business is simply not making enough money.
Here are a few of the most common reasons an LLC dissolves and would need to be reinstated.
Dissolving an LLC is done according to state law and is often done involuntarily. Failure to properly file or pay fees for an LLC can result in the members becoming personally liable to LLC's remaining creditors. Other reasons for an involuntary dissolution include:
- Not paying taxes forced to shut down
- Not making enough money
- Outstanding debts
During formation, an LLC files a certificate of formation with the secretary of state. Most state agencies are able to provide a pre-printed form that includes a section allowing the LLC to plan for expiration. This may have a specific date or the occurrence of a projected event.
An event may include a member dying, or in the event of bankruptcy. If the members do not specify a planned expiration date in the formation document, then it will be considered a perpetual LLC.
Although all members typically want to push to have the business work, in some cases, disagreements may arise. When these disagreements arise regarding the continued operation of the LLC, and it cannot be resolved, then the only sensible resolution is to voluntarily dissolve the LLC.
If you have shut down your own LLC, or were dissolved by the state, and need to reinstate it, there are a few steps to take in order to do so.
Business Purpose Completed
Some LLCs can be formed for a specific lawful business purpose. In some cases, this may include a limited duration. Should the LLC's business purpose end, the members would be able to voluntarily dissolve the LLC.
How to Reinstate an LLC
If you have shut down your LLC, or you were dissolved, and need to reinstate it you can do so at any time. This process will differ depending on the state your LLC was formed in but generally goes by the following guidelines.
- Search for your LLC
- Ensure your Registered Agent and Office Address are up to date.
- File what is known as the Articles of Reinstatement. The filing fee for the Articles of Reinstatement varies in different states.
- Pay the filing fee.
How Much does it cost to Reinstate your LLC
If you have considered reopening your LLC, the filing fee for the Articles of Reinstatement is $100. This generally needs to be filed online, and never by mail. You will need to pay the $100 filing fee with a debit or credit card.
The fee to reinstate your LLC legally should be paid to the government. Again, this is different for every state, check with your city hall to make sure you are following guidelines correctly.
If your LLC has been dissolved, no matter the reason, and you would like to reinstate it a business attorney can help.
There is often a lot of paperwork, signatures, and time needed to re-establish your business so you are seen as a legal entity in the eyes of the government.
If you would like to open your doors and provide value to customers in your community, contact us today for a free consultation or to schedule an appointment. We specialize in business law and have done this for many businesses before. Make sure your business bounces back on the right foot with the help of an experienced business law attorney.