In business, there’s always the worry that something will go wrong. Sometimes, despite your best efforts, you may still find your company has fallen inactive or landed in bad standing with the local government authorities.
If this should happen to you and your business, it’s important to know that not all is lost. You can reinstate your Limited Liability Company, or LLC, even if it has been dissolved. In this article, we will provide an in-depth look into all you need to know about reinstating your LLC in the state of Virginia and how an attorney like Wyoming LLC Attorney could help you.
What is an LLC
Firstly, let's begin by looking at what an LLC is. LLC stands for Limited Liability Company and refers to a business structure in the United States that makes the owners not personally liable for their companies debts or liabilities. They are hybrid entities that seamlessly combine the characteristics of both a corporation and a partnership or sole proprietorship and protect owners from having to deal with personal payouts and solutions for their company's financial woes.
Why would an LLC dissolve in Virginia
What does it mean for an LLC to dissolve
For an LLC to be dissolved it means that legal action has been taken to terminate a business entity’s existence. This means that the business is no longer a legal entity under state law and that it will no longer face corporate or LLC filing requirements such as franchise taxes and annual reports.
What are the types of dissolvement
There are two types of dissolvement when it comes to LLCs. These are:
Voluntary dissolution – when the shareholders or owners of an LLC have mutually decided to close the business. This is a choice that they have made perhaps under advisement or current understanding of their company's success at that time. To complete this they will then wind up their current operations, liquidate assets, pay creditors and taxes and distribute any remaining assets amongst themselves – the owners.
Involuntary dissolution – this is when a state brings in the action to dissolve a corporation. This is done based on state-specific guides and differs across the country but typically it happens due to some form of violation of an agreement. This is dissolution that occurs not because of the owners' or shareholders shared agreement that the company is failing but more so, the local governments.
Why would an LLC need to be dissolved
When owners choose to form an LLC or other legal entity in a state, they are subject to a host of state laws and requirements to be met. These laws provide legal permission for legal entity operations and all compliances have to be maintained. When looking at why an LLC may be dissolved, it’s important to consider whether it was voluntary or involuntary as the reasons will vary. If an LLC has closed voluntarily there may be many reasons for this. Some of these are:
- The owners have decided that the company has served its purpose
- They want to move on to new things
- The partners may have fallen out and not wish to work together anymore
- It isn’t making enough money
- They can see that down the line financial issues may get worse and harder to manage
There are also numerous reasons why an LLC would be involuntarily dissolved. This tends to be due to failure to comply with any pre-conceived commitments agreed on by the owners and the local government. Failure to meet these standards could call for the involuntary closure of a company. The most common reason for this is that the company has lost its Certificate of Good Standing which may occur due to:
- Failure to file the annual reports which are required
- Underpayment of taxes or missed taxes
- Not having a registered agent or forgetting to update the appropriate information regarding this, which has then led to missing important summons or government communication
- Operating without the appropriate and necessary state licenses
The compliance regulations for an LLC vary depending on the state. In the state of Virginia, there are numerous reasons why its government may intervene to dissolve an LLC. Some of these are:
- The LLC has been shown to have exceeded or abused its authority
- It failed to maintain a registered agent
- Failure to file any document that is required
- Violated 8 U.S.C § 1324a (f) – the employment of unauthorized aliens
How to reinstate an LLC in Virginia
If your LLC has been dissolved in the state of Virginia and you’re now considering beginning the process of reinstation, then there are certain steps to follow. There are requirements to meet, measures to take, and of course payment. To revive an LLC in Virginia, you will need to file the Virginia reinstatement packet with the State Corporation Commission of Virginia. As well as this, you will have to fix the issues that led to the dissolvement of your LLC, correcting any fundamental issues. You will also have to pay a reinstatement fee. There’s a lot of commitment that comes with running a company, so if you’re prepared to take on the necessary steps needed to begin the reinstallation process, then read on for our helpful step-by-step guide:
- Submit a completed Virginia reinstatement packet to the State Corporation Commission of Virginia
- Pay all owed registration fees
- Pay the $100 Virginia reinstatement fee
To complete the Virginia reinstatement packet, which is your first step, there are specific pieces of information you will need to provide. These are as listed below:
- Your entity name and type
- Any edits to your LLC’s existing information
- All missing annual reports
- Your payment information
- A signature from a person authorized to do business on behalf of your LLC
How much does it cost to reinstate your LLC in Virginia
The cost of reinstating your LLC in Virginia is $100. However, you may also have to pay any outstanding annual registration fees if you have previously failed to fulfill them.
If you’re wanting to reinstate your LLC in Virginia then the fastest way is online. To do this you’ll need to use your business entity name and SSC ID number to search for your business on the Virginia Clerk’s Information System. Once you find your LLC’s records you will need to log in using your entity PIN which will grant you access to the packet.
If you’d prefer to do this through a hard copy, you should request the reinstatement packet online and you can then process to mail it or hold it for pickup.
Reinstating vs starting a new LLC
There are many things to consider when getting back on track with your business and whether to reinstate or start new is arguably the biggest one. There are numerous benefits to both, whether you choose to reinstate Virginia LLC or reopening Virginia LLC, so to help you decide we’ve highlighted some pros and cons.
Why you should reinstate
- You gain back the benefits and protection a legal entity status offers
- Quickly resume interactions with an established customer pool
- Capitalize on your brand name, loyalty, and a unique selling point that you have already worked to build
- Pick up where you left off
- Take less time to see success
The pros of starting a new LLC
- A clean slate to start with
- Ideal if you felt the business had ran its course and wish to start new ventures
The cons of starting a new LLC
- Lose out on historical data
- Take much longer
- Steeper costs
- May lose out on your desired entity name
- Miss out on brand credibility
- Lose liability protection
- Miss out on established customer pool