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Should I Reinstate My LLC or Start a New One? (Explained)

Max Smith

Reading Time: 9 minutes

Getting banned from operating your LLC is without a doubt a bad situation to be in. In this case, you may wonder “should I reinstate my LLC or start a new one?”

A court of the Secretary of State has the right to dissolve your LLC. If you make a mistake or break the rules, your LLC may get punished. But all hope is not lost, you may find a way to get out of the dissolution status.

In this situation, you can reinstate your LLC or form a new one. Comparatively, reinstating an LLC is a good option. It will save you money and avoid the complex process of forming it again.

In this article, you will get a complete picture of reinstating an LLC. So, let’s jump into it!

There are multiple reasons behind your LLC’s dissolution. But you may have heard of 3 types of LLC dissolution. For instance,

  • Voluntary,
  • Administrative, &
  • Judicial 

You may not have known the reason earlier and suddenly got notice of your LLC’s dissolution. So check out the list below to avoid a dissolution situation.

1. Failed to Pay Taxes

If you failed to pay attention to taxes, a court may dissolve your business. It’s also called the judicial dissolution of an LLC. For example, your LLC goes void if you fail to pay franchise tax for four consecutive years.

2. Violating State Laws

In every state, there are some laws to follow. It will violate the rules if you do not care about the state laws where your LLC operates. As a result, the state court will sue your LLC and may shut down the business.

3. Failure to Submit Annual Reports

The Secretary of State takes annual reports seriously. If you do not submit them on time, then the Secretary of State can close down your LLC. It is a kind of administrative dissolution.

4. Dissolution Trigger

Read through your operating agreement. There can be some dissolution triggers. As an example, consider the death of a member. When a member dies, the LLC will dissolve. It also alleges voluntary dissolution.

5. Expiration

Another important thing to consider when looking at your LLC’s operating agreement is the expiration date. If your LLC was made to perform for a specific timeline, you cannot run it after the mentioned time frame. 

6. Applying for Dissolution

If the members vote for dissolution, then the LLC goes through the dissolution process. You may apply for it with the Secretary of State and thus officially end your LLC.

7. Losses

Unfortunately, your LLC may only face losses. In this case, it cannot pay its debts, taxes, or other fees. So, it moves toward dissolution.

8. Conflicts Among Members

Sometimes, the unity gets broken, and members opt out of the business. So conflicts are another reason for an LLC to dissolve.

9. Relocating LLC

You can change the state of your LLC operations. But you should dissolve the LLC first and then start it in another state.

These are some of the major and common reasons behind the dissolution of an LLC. Apart from this, there can be extra rules for a specific state. Find out your state’s special rules to follow and avoid dissolution.

Before I explain the answer to “should I reinstate my LLC or start a new one?”, in the next section let’s first take a look at if it’s possible to reopen a dissolved LLC

Can You Reopen a Dissolved LLC?

Fortunately, you can reopen your dissolved LLC. But if your LLC is in Alabama, then it is not possible. Reopening a dissolved LLC in Alabama is not allowed. 

So, apart from Alabama, you can apply for reopening in all the states of the United States. However, the chances of reopening your dissolved LLC depend on some factors. Some of them include:

  • The way your LLC was dissolved is crucial. For example, was it dissolved judicially, voluntarily, or administratively?
  • State-specific rules apply where your LLC operates its business.
  • Having the necessary documents to submit to the government agency or secretary of state.

Lastly, reopening an LLC requires a process to follow. Once you complete the reopening or reinstating process, you can definitely reopen your LLC and begin to operate business activities just like before. 

But how can you really reinstate your LLC? Do you know the process in detail?  Read on to find out!

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Why Should I Reinstate My LLC Instead of Forming a New One?

Though your LLC is now dissolved, you can reinstate it. It will allow you to enjoy liability protection, legal entity status, and LLC benefits again. For example, continuing interaction with your customers, carrying on your brand value, and more.

It’s really hard to form and take a business to a certain level. All your efforts are not going in vain as you reinstate your LLC. But if you are thinking of forming your LLC again, then be ready to face some troubles.

Cons of Forming a New LLC

If you form your LLC instead of reinstating it, then you may face the troubles listed below:

  • You will lose all the data regarding business finances, bank statements, licenses, statistics, and more.
  • It takes time to form your LLC again. In the meantime, you will not get the asset protection facility.
  • You will lose your rights to the name you used for your LLC.
  • Unfortunately, you will lose brand value and recognition. It takes years and efforts to build a brand, but you may lose it as your LLC is not reopening again.
  • Did you have many loyal customers? You may lose the customer’s faith and the regular customers of your LLC business.
  • Forming an LLC is costly. In some states, the registration fee is higher. For example, the registration fee in Massachusetts is $500.
  • As your LLC is new, you should apply for the EIN again.
  • Make the essential documents to form an LLC. For example, “Articles of Organizations” and “Operating Agreement.” Plus, prepare the necessary papers again for business activities. For instance, contract papers with vendors, banks, or other financial institutions.

Where forming an LLC again gives you only losses, reinstating an LLC benefits you. Do you wonder how?

Pros of Reinstating an LLC

Below, let’s see some of the significant benefits you will get if you reinstate your dissolved LLC.

  • Reinstating an LLC takes less time than forming an LLC. Thus, it saves you valuable time.
  • Use your existing LLC name. So, there is no need to change or search for another name.
  • Keep all your LLC’s papers, works, and histories for future activities.
  • Continually maintain the already-built relationship with the customers.
  • Carry out your brand recognition and take it to the next level.

So, you should reinstate your LLC instead of forming a new one. Lastly, it’s simple enough to reinstate your LLC but maintain a few legal steps.

How Do I Reinstate My LLC?

If you really want to reinstate your LLC, go back to the past and find out the reasons that made it dissolve. To reinstate your LLC, it is crucial to resolve the previous objections related to your LLC. You may need to pay taxes, late fees, an overdue annual report or something similar.

Afterwards, get the Articles of Reinstatement form and file it with the Department of Revenue or Secretary of State. Thereafter, submit the necessary documents to prove that your LLC is now ready to restart again, as it is not violating any rules. 

Lastly, you may also submit specific documents to the Department of Revenue. Remember, the required documents and fees vary from state to state. In order to reinstate your LLC easily and smoothly, there are few steps that you can follow.

Steps for Reinstating My LLC

Let’s check out the checklist below:

  • Get all the annual reports. Be ready to show your annual reports for the last 6 years.
  • Pay all the due or late fees.
  • Submit a reinstatement application.
  • Make an application containing all your LLC changes or additions. For example, the changed or new names and addresses of your LLC managers, officers, directors, and other authorized persons.
  • Don’t forget to add any partners whose addresses have changed.
  • A new registered agent details.

Lastly, once you submit all the papers properly, you will wait for the reinstatement certification. Note that it takes time, and it’s not the same for every state. So, get to know what the reinstatement duration is in your state.

How Long Does It Take to Reinstate LLCs in Different States?

The duration of the reinstatement process is variable across states. They are shown below.

State Name

Duration of Reinstatement

Alaska

10–15 business days

Arizona

2-3 weeks

California

At least 8 weeks

Colorado

2–3 business days

Connecticut

3–5 business days

Delaware

10–15 days

Florida

2–4 days (online filings)

Georgia

7–10 business days

Hawaii

20-30 business days

Idaho

7-10 business days

Illinois

Within 10 business days

Indiana

4 to 6 weeks

Lowa

About four weeks

Kansas

2-3 business days

Kentucky

1-3 days

Louisiana

3-5 business days

Maine

5–10 business days

Maryland

4–6 weeks

Massachusetts

3-5 business days

Michigan

3-5 business days

Minnesota

3-5 business days

Mississippi

1-2 business days

Missouri

1-2 working days

Montana

One to two weeks

Nebraska

4–6 weeks

Nevada

7 to 12 business days

New Hampshire

2-4 business days

New Jersey

2-3 days

New Mexico

Within 5 business days

New York

7 business days

North Carolina

7–10 business days

North Dakota

a few days to a month

Ohio

3-5 business days

Oklahoma

Between 5 and 7 business days

Oregon

1–2 business days (online filing)

Pennsylvania

1 week

Rhode Island

Between 2-4 business days

South Carolina

2-3 business days

South Dakota

1-2 business days

Tennessee

1-2 business days

Texas

3–5 business days

Utah

5-7 working days

Vermont

7-10 business days

Virginia

1-2 weeks

Washington

5-7 business days

West Virginia

5–10 business days

Wisconsin

5 business days

Wyoming

5-7 business days

How to Get an LLC Back in Good Standing

Turning your LLC from bad standing to good standing is challenging. But it’s possible and becomes easy when you do it step by step.

So, let’s figure out some common factors or ways of getting good standing.

1. Overcome the Compliance Issues

Your LLC might make some mistakes in maintenance. If you successfully analyze the issues, you can take several steps to resolve them. It will help you avoid repeating it in the future. Some of the compliance issues are:

  • Outstanding annual and other reports.
  • Updated details of your LLC’s registered agent.
  • Overdue tax returns and franchise taxes.

2. Pay the Outstanding Fees

It’s time to pay all the due fees or penalties. Your LLC will pay penalties if you break the law and fall short of performing maintenance well. Calculate all the overdue fees and submit them to the Secretary of State. 

For example, state officials will charge you if your LLC fails to submit an annual report or a late tax lien. Paying all the outstanding fees to the state agencies is a must.

3. File Reinstatement Paperwork

To turn your LLC into a good status, you must reopen your LLC. That’s why you will submit the reinstatement application to the secretary of state. 

After paying all the fees and taxes and submitting the necessary documents, you can apply for reinstatement. The required documents and fees vary by state.

Once your LLC overcomes all the faults, the Secretary of State will give you another chance to run your LLC. Lastly, you must identify the reasons behind your LLC’s dissolution. Thus, you can overcome the obstacles and begin a journey with a good-standing LLC.

Conclusion

Dissolved by your state or court, forcefully leave your LLC’s elements just like they were. So why start an LLC while you already have an LLC? Your state is offering you the option to apply for reinstatement. So take advantage of it!

Apply for reinstatement with the associated fees and wait patiently. Once you have paid all the outstanding fees, taxes, and penalties, you are set to run your LLC with the members, registered agent, assets, and debts.

In the end, I hope you get the answer to your question: should I reinstate my LLC or start a new one? So, best of luck with your LLC!

Key Points

  • If your LLC gets dissolved, you have the option to reinstate it or start a new one.
  • Reinstating is generally a better option, saving money and avoiding the complexities of forming a new LLC.
  • Reopening is possible in all states except Alabama.
  • Factors affecting reopening include the manner of dissolution, state-specific rules, and required documentation.
  • To reinstate, resolve previous issues like unpaid taxes, late fees, or overdue annual reports. Obtain the Articles of Reinstatement form and file it with the relevant state department. Submit necessary documents to prove compliance with rules.
  • Reinstatement durations vary across states, ranging from a few days to several weeks. Some states offer expedited processing for an additional fee.
  • Reasons for dissolution include failure to pay taxes, violating state laws, not submitting annual reports, dissolution triggers in operating agreements, expiration, applying for dissolution, losses, conflicts among members, and relocating the LLC.

Frequently Asked Questions

Can you reinstate a dissolved LLC in California?

Yes! You can apply for reinstatement of a dissolved LLC in California with the associated fees. The handling fee can be $15. You may also need to wait at least 8 weeks to complete the process. In addition, you can also get the same-day processing facility if you pay $750.

Can you reinstate a dissolved LLC in Georgia?

Of course, you can! But you must apply for or reinstate within the 5 years of dissolution administratively. Follow your state-specific rules and apply for reinstatement with the regarding fees.

What happens when an LLC expires?

The LLC comes to an end when it expires. The expiration date may be included in the operating agreement. It’s also one of the reasons for dissolving an LLC.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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