By The Wyoming LLC Attorney TeamMay 15, 2023
The article explains the process of reinstating a dissolved New York LLC. It discusses reasons for dissolution, steps to reinstate the LLC, and costs involved.
Reinstating or reopening a dissolved New York LLC can be a challenging and intricate process, particularly if you dissolved the LLC voluntarily. The reason behind this is that, unlike some other states, New York doesn't provide an administrative dissolution process for LLC revival. Therefore, if you've decided to dissolve your LLC and wish to resume business under the same name, you'll need to initiate the process of forming a new company.
Following are detailed instructions on understanding LLC reopening in New York, covering all the essential information you need. We'll walk you through the steps to take, the forms to file, and the fees to pay to reinstate New York LLC and restore your business operations.
A limited liability company (LLC) is a popular legal entity in the United States that provides powerful protection for its members. This corporate structure combines aspects of sole proprietorships, partnerships, and corporations to produce an advantageous result for business owners. As a result, LLCs have become a preferred choice for many entrepreneurs and small business owners due to the flexibility they offer.
One of the primary benefits of forming an LLC is that it shields its owners from personal liability for the company's debts or liabilities. That means that in the event of a lawsuit or bankruptcy, the personal assets of LLC owners are properly protected. In addition, LLCs offer several tax advantages, including the ability to choose how the business is taxed. Moreover, LLCs can include an infinite number of owners or members, which allows for significant flexibility in terms of management and ownership structure. Overall, limited liability companies are a highly effective way for business owners to structure their operations and protect themselves from personal liability, making them an ideal choice for those seeking a balance of flexibility and protection.
An LLC dissolution refers to the process of officially terminating the legal existence of a limited liability company. Generally speaking, an LLC can dissolve in two ways: voluntarily or involuntarily. Voluntary dissolution occurs when the LLC's owners or members decide to shut down the business for any reason. In contrast, involuntary dissolution takes place when a court or state agency forces the LLC to cease operations due to legal or administrative issues.
In New York, however, involuntary dissolution does not exist and so if you stop doing business with your existing LLC, it will remain active until you take action towards dissolving it yourself. Alternatively, should you wish to activate again after voluntary dissolution has taken place then forming a new company would be necessary.
Common reasons why an LLC may lose its good standing status and eventually dissolve include:
In New York, to be compliant with state laws, a company must file specific reports and pay the required taxes. Failure to fulfill these obligations can result in bad standing status, leading to fines and the loss of the benefits available to its entity type.
But unlike in many other states, in New York, failing to file your biennial statement won't result in late fees or administrative dissolution of your LLC. Instead, the New York Department of State will alter your LLC's status to "past due," which will cause you to lose good standing status, making certain business transactions difficult.
When a business loses its compliance status, it can result in significant consequences. These can include potential fees, fines, and penalties, which can cause delays when transacting business with contractors, licensing and government agencies, and banks. In addition, a loss of credibility can also harm the business's reputation and may impact future opportunities.
If you have voluntarily dissolved your LLC but wish to resume business operations, the only way to reinstate the company is by petitioning the court. This process is available to LLCs regardless of the duration of their dissolution.
Reinstating a dissolved LLC through a court petition may seem daunting, but it is a necessary step to continue conducting business under its name. The court may require you to submit specific documents or provide evidence of compliance with state regulations before granting your request for reinstatement.
However, if your LLC has only lost its good standing with the state and you haven't dissolved it yet, you can follow the procedure below to get it back.
As mentioned, failing to file a biennial report can result in a change of your entity's status to "past due." To cure this status, you must file the delinquent biennial statement and pay the fee online, and your entity will be restored to good standing.
The biennial statement is required to contain the following information:
After submitting your application, you might need to update your company's information with the state. Nevertheless, if your LLC's status is "past due," you cannot change your registered agent with the standard procedure.
In this case, a Certificate of Change form must be filed with the Corporations Division instead. This form requires specific information, such as the name of your LLC, the name of the new registered agent, and the effective date of the change. The filing fee is $30.
In several states, including New York, reinstating an entity requires obtaining "tax clearance" from the state's tax authority, such as the Department of Revenue or Department of Taxation. This process involves obtaining written proof that your LLC has cleared all past or overdue taxes.
Once this written proof is delivered to the state, the Department of State typically takes around seven business days to process the New York reinstatement filings. During this period, it is crucial to ensure that all documents are correctly filled out, and all necessary fees are paid to avoid any delays in the reinstatement process.
The reinstatement process for an entity can vary depending on the state in which it operates. As mentioned, some states require tax clearance before reinstating an LLC, while others do not. Additionally, the forms and fees needed for reinstatement can vary significantly from state to state.
For instance, in California, entities that have been suspended must file a statement of information, pay all outstanding fees and penalties, and submit a written request for reinstatement. In Texas, entities can apply for reinstatement by filing a franchise tax report, paying any outstanding taxes and penalties, filing an application for reinstatement, and providing a tax clearance letter.
Navigating the reinstatement process across different states can be challenging, particularly for entities that operate in multiple states. For this reason, seeking professional assistance can help ensure compliance with all state regulations and avoid any legal complications that may arise.
The biennial statement can be filed online using the Department of State's e-Statement Filing Service. The filing fee for the statement is $9, payable via credit or debit card (MasterCard, Visa, and American Express are accepted). The e-Statement Filing Service is available from Monday to Friday, from 6:00 a.m. to 7:30 p.m. Eastern Standard Time.
However, to utilize this filing system, you must have the exact name of the entity and its DOS ID number. You can find this information by searching your LLC in the Department of State's Corporation & Business Entity Database.
Reopening New York LLC may be the best choice if the company has a history of successful operations, a solid reputation, and existing contracts, licenses, or permits. Additionally, reinstating an LLC may help preserve the company's brand and reputation in the market, as well as maintain the LLC's corporate identity and history.
On the other hand, starting a new LLC may be a better option if the previous LLC has accumulated significant debts or liabilities or if there have been major changes in the business structure or ownership. This fresh start also provides an opportunity for crafting a new vision while avoiding any potential legal and financial issues associated with the old company.
It is essential to consult experts before making this important decision regarding your situation. Seeking professional assistance can help you prevent any potential legal or financial problems.
Reopening a New York LLC can be a complex process that requires attention to detail and adherence to state regulations. However, by following the necessary steps and seeking professional help when needed, you can successfully reinstate your LLC and get back to doing business in the state.