Business Filing FAQ

Incorporation Business Filing FAQs

Q: How many types of entity types are there to choose from?

A: For an incorporation, there are four basic types: C-Corporation, S-Corporation, Professional Corporation, or Non-Profit Corporation. There are also Limited Liability Companies (LLC) and DBA’s (Doing business as). You can read more about these entity types in our Learning Center under Help Me Decide.

Q: What is a C-Corporation?

A: There is really one major distinction that sets a corporation apart from other business entities. A corporation is truly separate from the people who own and manage it. As a result, the corporation must pay it’s own taxes…they are not paid by the owners or managers. Owners, for example, only pay taxes on money that the corporation pays them in the form of salaries and bonuses, just like in any other job.

Q: What is an S-Corporation?

A: An S-Corporation is a regular corporation business filing, which has selected an S-Corporation tax status. When this is done, the owner still gets the liability protections of a corporation; however, all of the tax responsibilities pass directly through to the owner as if he or she were a sole proprietor. All profits or losses would appear on the owner’s personal tax returns. NOTE: Any corporation can elect S-Corporation status after it has been formed. The process requires submitting specially prepared tax forms to the IRS and may require a state level filing as well.

Q: What is a Professional Corporation?

A: There are certain activities, which businesses engage in that states consider to be “Professional Services”. Examples of “Professional Services” include the following:

Medical Services
Architectural Services
Accounting and Financial Services
Legal Services

Some states might designate other professions as “Professional Services”, and it may be important for you to seek the advice of an attorney if you feel that your business might fall under these statutes. Once you determine that a Professional Corporation is right for you, we can prepare the special your Articles of Incorporation as required by the state.

Q: What is a Non-Profit Corporation?

A: Corporations which select Non-Profit status generally are formed for a non-commercial purpose, such as the support of a charity, religion, research, or even politics and education. Such an organization is governed under special rules that affect a number of issues such as taxes and what happens to the group’s assets upon dissolution of the company. Because of their specialized status, we recommend seeking competent counsel for both legal and accounting purposes before finalizing your decision on Non-Profit status. As always, once this selection is determined, we can handle everything else.

Q: How will incorporating my business benefit me?

A: No matter what size your business is or how large you intend to grow, there are clear advantages to forming a Corporation or an LLC. Four of the most common reasons for formalizing your business are:

Potential tax benefits
Increased credibility for your company
Personal asset protection
The business can continue to operate even if an owner or partner leaves.

Q: What is the main difference between an LLC and an S-Corporation?

A: An LLC has more flexibility and fewer restrictions than an S corporation. An S corporation cannot have more than 100 stockholders, cannot issue more than one class of shares, and is subject to more formalities than an LLC. However, owners of an LLC are required to pay Social Security and Medicare taxes on profits. Corporate stockholders are not required to pay these taxes on profits over and above the stockholders’ salaries.

Q: What is the main difference between a C-Corporation and an S-Corporation?

A: C corporations are subject to double taxation. This means there is one tax at the corporate level on the corporation's net income, and another tax to the shareholders when the profits are distributed. S corporations have only one level of taxation. All of their income is allocated to the stockholders.

However, C corporations have greater tax planning flexibility and can shield stockholders from direct tax liability. In addition, S corporations are subject to limitations, such as the number and type of stockholders they can have.

Q: What do I get back once I have formed my corporation?

A: Once your filing is finalized, you will receive your Articles of Incorporation, as well as paperwork related to your by-laws and organizational minutes. Depending on your individual filing, there may be other documents returned to you, such as an EIN or DBA related items.

Q: What is involved in selecting a Corporate Officer?

A: When we begin your filing, we will allow you to select as many as four officers for your corporation. There are, however, only three positions, which are considered mandatory:

President
Treasurer
Secretary/Clerk

Most states will allow one person to serve in all three positions. In such a case, the person’s responsibilities and authority will be different in each position.

President: This position has responsibility for the overall management of the company and carries out the orders of the board of directors.

Treasurer: This is the chief financial officer and he or she will manage the bank accounts and finances of the business.

Secretary: This position is responsible for maintaining all corporate records for the company.

Q: How long does it take to finish a new business filing with EZonlineFiling.com?

A: The answer to this question is very dependent on the state in which you are forming your company. With EZ Online Filing.com, we begin to process your formation paperwork the same day you speak with us and we can even rush your order, which can speed the process up. We may be able to have a completed formation back to you in just a few days, but if your Secretary of State is behind, it can take much longer. Talk to us about any time constraints you have and let us help you find an answer specific to your business filing needs.

Q: What does it mean when someone talks about “piercing the corporate veil”?

A: This is the legal term used to describe an action to have the corporation set aside for purposes of the litigation, such that personal liability attaches, and personal assets can be reached. One of the biggest advantages to incorporating a business is that the principals of a corporation or LLC enjoy broad protection from being held personally responsible for the debts and liabilities of the corporation. That is, creditors can reach the corporation's assets, but once those assets are exhausted they cannot ordinarily also reach the personal assets of the owners or shareholders of the corporation. Those to whom a corporation is liable may try to “pierce the corporate veil”. For this reason, it is vital that the owners and members make every attempt to follow all corporate formalities required by the state and never use a corporation for personal use.

Q: What does it mean for a business to fall into “bad standing”?

A: This is the common terminology used to describe a business entity that has not properly maintained its obligations with one or more states where it conducts business. Companies that are in bad standing long enough risk administrative dissolution or revocation by the state. This should be avoided because when a state administratively dissolves a corporation or LLC or its corporate or LLC status is revoked, the benefits of being a corporation or LLC are lost to the business.

Q: What is “pass-through” taxation?

A: This means that the business entity, itself, is not directly taxed, and the tax burden is instead passed on to the owners and/or members. Thus, the business entity passes its profits and/or losses to the owners as income, wages and profit payments, and each owner or member pays the taxes on their individual share of those profits.

Q. What is a conversion?

A. A conversion is a special business filing that is made with the state of formation allowing an entity to change from its originally filed entity type to a different entity type. For example, if a business was originally formed as a limited liability company (LLC) and the owner wishes to change the structure to a corporation, they may wish to file a conversion as opposed to forming a completely new entity.

Q. Is it possible to convert from one entity type to another? Is this a seperate business filing?

A. Yes, it is possible to change from one entity type to another; however, the process is different from state to state, depending on the conversion taking place, such as limited liability company (LLC) to corporation or corporation to LLC.  In the most difficult instances, business owners must create a new company; transfer company assets from the old company to the new one; and dissolve the old company. However, some states have implemented more streamlined processes for conversion. We can handle this business filing for you.

We can identify the necessary process for your company, based on the state of formation and the intended conversion. Please contact our customer service team for information specific to your situation.

Q. Can I convert my sole proprietorship or partnership to a limited liability company (LLC) or corporation?

A.Yes, although its not considered a conversion. In these instances, you need to form an LLC or form a corporation through a new business filing and transfer the assets of your old company into the newly-formed business entity.

Q. Can I convert my C corporation to an S corporation?

A. Yes, although its not considered a conversion. An S corporation, or subchapter S corporation, is a standard corporation (C corporation) that has elected special tax status with the Internal Revenue Service (IRS) through an S-Corp election business filing. In order to elect S corporation status, a timely business filing of Form 2553 must be made with the IRS. View the frequently asked questions on S Corporations for more information on S corporation requirements.

Q. Can I convert my S corporation to an C corporation?

A. Yes, although its not considered a conversion. Business owners must change their elected tax status with the Internal Revenue Service (IRS).

Q. Does converting a company have tax implications?

A. Yes, a change in entity status may entail immediate or future tax costs. For example, if you liquidate a corporation in order to form a limited liability company (LLC), there may be tax to both the corporation and its shareholders. If, however, the corporation has losses, there may be no tax upon liquidation. It is best to seek the assistance of an accountant or tax advisor for advice on your particular situation.

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LLC FAQs

Q: What is a Limited Liability Company (LLC)?

A: A Limited Liability Company, commonly referred to as an LLC, is a legal entity used for business that is separate and distinct from its owners and managers. It has characteristics of both Corporations and Sole Proprietorships. Like a corporation, the owners of an LLC are not personally liable for business debts. Like a sole proprietorship, an LLC has operating flexibility and is a pass-through entity for tax purposes. This means the LLC’s profits are passed through and taxable to the owners of the LLC.

Q: What is the main difference between an LLC and an S-Corporation?

Q: What do I get back once I have formed my Limited Liability Company?

A: Once we have finalized your filing, you will receive two very important documents from us, your Articles of Organization and your Operating Agreement. These documents are what the whole process has been about. Depending on your individual filing, there may be other documents returned to you, such as an EIN or DBA related items.

Articles of Organization: This document verifies that you have a legitimate business. These articles have been approved by the Secretary of State and should be kept in a safe place! They include basic information, which you may sometimes need to refer to such as the business name, business purpose, and any stock, which may be issued.

Operating Agreement: Just as the Articles of Organization give you a basic outline of your company, the Operating Agreement contains all the rules for the conduct of the LLC. This will include information on meetings, notices, officers and their duties, and are a formal contract. NOTE: The Operating Agreement must be completed and signed upon receipt!

Q: How long does it take to form a business?

A: The answer to this question is very dependent on the state in which you are forming your company. With EZonlinefilings.com, we begin to process your formation paperwork the same day you speak with us and we can even rush your order, which can speed the process up. We may be able to have a completed formation back to you in just a few days, but if your Secretary of State is behind, it can take much longer. Talk to us about any time constraints you have and let us help you find an answer.

Q: What does it mean when someone talks about “piercing the corporate veil”?

Q: What does it mean for a business to fall into “bad standing”?

Q: What is “pass-through” taxation?

Q. What is a conversion?

A. A conversion is a filing that is made with the state of formation allowing an entity to change from its originally filed entity type to a different entity type. For example, if a business was originally formed as a limited liability company (LLC) and the owner wishes to change the structure to a corporation, they may wish to file a conversion as opposed to forming a completely new entity.

Q. Is it possible to convert from one entity type to another?

Q. Can I convert my sole proprietorship or partnership to a limited liability company (LLC) or corporation?

A. Yes, although its not considered a conversion. In these instances, you need to form an LLC or form a corporation and transfer the assets of your old company into the newly-formed business entity.

Q. Does converting a company have tax implications?

A.Yes, a change in entity status may entail immediate or future tax costs. For example, if you liquidate a corporation in order to form a limited liability company (LLC), there may be tax to both the corporation and its shareholders. If, however, the corporation has losses, there may be no tax upon liquidation. It is best to seek the assistance of an accountant or tax advisor for advice on your particular situation.

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DBA FAQs

Q: What is a DBA (Doing Business As)?

A: Very simply put, DBA stands for “Doing Business As” and it is an official registration of the name you are conducting business in. This is used anytime you are conducting business in a name that is different from your personal legal name or your businesses legal name.

Q: Do I need to file a DBA?

A: This type of registration is necessary if you are conducting business in a name other than your personal name or the legal name of your business. Also, it is customary for banks to require a DBA registration to open a bank account. It is an extremely common filing and is used by both sole proprietors and corporations on a regular basis.

Q: To open a business bank account, do I need a DBA?

A: Generally, you do. Most banks require it to open a business bank account and in many states, they require that you provide them with a certified copy of the DBA.

Q: Can you give me an example of what a DBA might be?

A: For this first example, Mark Thomas runs a landscaping and lawn care business, which he advertises as QuickCuts. His customers make checks out to QuickCuts and Mark needs to deposit them into his bank account or cash them. Usually, advertising the name alone would require a DBA filing, but add in the checks and Mark will almost certainly be required to file a DBA.

Q: Are there names that a DBA cannot be?

A: Yes. DBA’s are not allowed to imply that they are a formal corporation. So, you would not be allowed to add “Inc” to the end of the name. From the above example, Mark would not be able to file his DBA as QuickCuts, Inc. However, almost any other name would likely be fine.

Q: Am I required to file a DBA and, if so, how soon must I do so?

A: Some states require the filing happen within a short amount of time from when you begin to use the name, usually within 30-60 days. However, it is best to file your DBA prior to ever using it.

Q. Can a doing business as (DBA) be filed for all entity types?

A. DBAs can be filed for all entity types. We can assist sole proprietorships, partnerships, limited partnerships (LPs), limited liability partnerships (LLPs), corporations, limited liability companies (LLCs) and nonprofits in filing a DBA.

Q. When does a corporation or limited liability company (LLC) file a doing business as (DBA)?

A. A corporation or LLC files a DBA registration if it intends to transact business under a name other than the legal name that appears on the corporation’s or LLC’s state-approved formation document(s). The corporation or LLC must file the DBA with the appropriate state and/or county agency in the state in which the company is formed or foreign qualified.

Q. Why should I file a doing business as (DBA)?

A. One of the most important reasons for filing a DBA is for banking purposes. Most banks will require the filed DBA registration prior to opening an account under the business name. In addition, the DBA filing becomes part of the public record, thereby giving other businesses official notice that this name is in use.

Q. Are doing business as (DBA) filings mandatory?

A. An individual or company will be required, in most jurisdictions, to file a DBA if they choose to transact business under a name other than the owner's personal name(s), for sole proprietorships and partnerships, or the name used on the company’s formation documents.

Q. Do I have to file a doing business as (DBA) before I can begin transacting business?

A. In most cases the state or other local agencies require a DBA to be filed prior to transacting business under a name other than the owner’s personal name or the name listed on the company’s formation documents. Additionally, without the DBA registration document, you may not be able to open a business banking account in the DBA name.

Q. Where should I file my doing business as (DBA)?

A. DBAs are typically filed in the state and/or county where the principal business address or street address of the business is located. In some cases, it is necessary to file the DBA in other local jurisdictions, such as with the city or town clerk.

Q. What steps are involved in filing a doing business as (DBA)?

A. Filing a DBA involves the following steps:

Preliminary name check with the appropriate state and/or county agency (if applicable)
Preparation and filing of the DBA document(s)
Payment of DBA filing fees to the state and/or county agency
Publication of DBA filing with local newspapers (if applicable)
Re-file publication with state and/or county agencies (if applicable)

Q. What words are prohibited in a doing business as (DBA) name?

A. There are restrictions on the words you may use in your DBA name. In addition, you cannot use words that may mislead the general public into believing the company is something other than what is being portrayed by the DBA name. For example, you may not use corporate name endings such as Inc., Incorporated or Corp. if the company is not filed as a corporation. Additionally, you may not use Limited Liability Company or LLC if the company is not filed as an LLC.

Q. How long does it take to complete the filing of a doing business as (DBA)?

A. The typical completion time for the DBA Filing Service is 4 to 8 weeks.

Q. How many doing business as (DBA) names can I register?

A. There are no state and/or county restrictions as to the number of DBA names you may file.

Q. Can someone else use my doing business as (DBA) name?

A. Registering a DBA typically does not reserve the name against future use by another party. In most cases, registration of a DBA or fictitious name is for public notice only and should not be presumed that the registrant’s rights to own or use the name are protected.

Q. Do doing business as (DBA) filings expire?

A. DBA filings can be valid for any number of years and may or may not expire. Each state and/or county where the DBA is registered establishes the expiration date. If your DBA filing expires, the appropriate agency will notify you at the address you have on record with that agency and you will need to re-file the DBA name. Therefore, maintaining a current DBA business address with the appropriate agency is very important.

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Registered Agent FAQs

Q: What is a Registered Agent?

A: Generally, states require businesses to provide them with an address of record in every state where they do business to facilitate the receipt of legal documents and notices. The address or person who receives these notices must be in that state and they are referred to as the Registered Agent. This can be cumbersome to accomplish on your own, which is why we provide this service in all 50 states.

Q: Do I need a Registered Agent?

A: Every state requires that you register to do business within that state and they generally require a designated agent for the purpose of receiving legal and official documents.

Q: What happens if I don’t designate a Registered Agent?

A: Failure to maintain a Registered Agent may cause you to fall out of good standing with the state. This could result in your company no longer being allowed to conduct business in that state as well as financial penalties imposed by the state. Falling out of good standing could result in your company being subject to civil and criminal sanctions, as well as financial losses.

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EIN FAQs

Q: What is an EIN?

A: This is a number issued by the IRS to identify a business for tax purposes.

Q: How do I know if I need an EIN?

A: You likely need an EIN if you would like to distinguish your business activities from your personal life for tax purposes. There are some clear situations where an EIN is needed. Examples would be:

You operate as a corporation or partnership
You have employees
Your business is involved with one of the following:
Trusts
Estates
Non-profit Organizations
Farmers Co-ops

This is hardly an exhaustive list. It is generally a good idea to use an EIN for business since it distinguishes your business from you, personally.

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Initial Report FAQ’s

Q: What is an Initial Report?

A: Many states require businesses to file what is known as an Initial Report at the time of the business formation. This is one of the occasions when the state will collect information about your business activities and locations, as well as current contact information for the business owners and managers. If required by your state, this is a very important filing that gets your business off to the right start with the state.

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Annual Report FAQs

Q: What is an Annual Report?

A: Most states require a yearly update of your vital business information. This is called an Annual Report, or sometimes, a Statement of Information.

The Annual Report is very similar to the Initial Report filed when your business is started, but is an ongoing requirement of the state and must be filed each year. This is a requirement whether you are currently conducting business or not and if not filed on time this could result in penalties and fees being imposed by the state.

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Amendments FAQ’s

Q: What is an Amendment?

A: Just about anytime you need to make a change to your LLC or Corporation, you can count on the state requiring some paperwork to make it official. Maybe you have changed your address or a member or director left the business. The official name for the paperwork required is Article of Amendment and there are actually a number of reasons you might need our help on this one.

Here are some examples:

Change of principle office address
Change in Registered Agent
Change of names or addresses of members or directors
Change in number of shares
Change of the name of the business
Change of the purpose of the business

Q. Can you help me file an amendment even if I didn’t form my company with your company originally?

A. Even if you didn’t place your original formation order with us, we can prepare and file the necessary amendment documents for your business in any state.

Q. What information do I need to have before I place a name amendment order?

A. When ordering your name amendment, please have the following general information ready:

Two name choices for your company
State of formation
Entity type
Company name
Formation date
Business purpose
Company contact information
Director(s) name(s) & address(es) (for corporations)
Officer(s) name(s) & address(es) (for corporations)
Member(s) or Manager(s) name(s) & address(es) (for LLCs)
Partner(s) name(s) & address(es) (for LPs and LLPs)

Q. To what should I change the name of my company?

A. Choose the name of your company carefully. It is very important that you portray the image you want for your new company. Legally, the name you select must not be “deceptively similar” to any existing corporation, LLC, Limited Partnership or Limited Liability Partnership and must be “distinguishable on the record” of your state. It is possible that the name you select is not available; therefore we ask for a second choice on the amendment order form.

Additionally, the name you choose must show your business is incorporated, an LLC, an LP or LLP. Most states require that the company name be followed by an entity ending such as "Corporation," "Incorporated,"“Limited Liability Company,” "Limited Partnership", "Limited Liability Partnership", or an abbreviation such as "Inc.," "Corp.," “LLC,” “LP,” or “LLP.”

Q. How do I check the availability of the name I want to use?

A. Our name amendment service includes a preliminary name check with the state. However, if you would like to check the availability of a desired name prior to submitting your name amendment order, we can perform a preliminary name check with the state as a stand-alone service. The fee is $25 for us to check 2 name choices.

Q. What happens if the name choice(s) I submit are not available?

A. If the name choice(s) you have requested are not available, we will contacts you for additional name options. Providing us with two name options when you place your name amendment order helps to secure a name choice and eliminates a potential delay in the processing of your order.

Q. When do companies typically need to file a name amendment?

A. A company would file a name amendment if they intend to transact business under a different name other than the legal name that appears on the formation document.

Q. Can my company conduct business under a different name without changing the name of my company?

A. If you wish, a doing business as (DBA) can be filed with the appropriate state and/or county agency in the state in which the company is formed and if applicable foreign qualified. A DBA is used if the company intends to transact business under a name other than the legal name that appears on the formation document.

Q. Can you help me file a change of purpose amendment if I didn’t for my company with your company?

A. Even if you didn’t place your original formation order with us, we can prepare and file the necessary purpose amendment documents for your business in any state.

Q. What information do I need to have before I place my order to file a change of purpose amendment?

A. When ordering your purpose amendment with us, please have the following general information ready:

The new detailed business purpose language
State of formation
Entity type
Company name
Formation date
Current business purpose
Company contact information
Director(s) name(s) & address(es) (for corporations)
Officer(s) name(s) & address(es) (for corporations)
Member(s) or Manager(s) name(s) & address(es) (for LLCs)
Partner(s) name(s) & address(es) (for LPs and LLPs)

Q. What is a general-purpose clause? Can I change my purpose if I have this listed?

A. The majority of the states allow for a general-purpose clause, such as “all lawful business,” to be used within formation and foreign qualification documents, and there are a few states that do not require any business type to be listed. In cases where a specific business purpose was included, listing the type of business your company would undertake, and you want to change the type, this can be done through an Article of Amendment. If the general-purpose was listed, or no specific type listed, you can change the purpose of the business with out notifying the state office.

Q. When do companies need to file a purpose amendment?

A. A company would file a purpose amendment when a specific business purpose was included in your formation document, listing the type of business your company would undertake, and you want to change the type.

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Foreign Qualifications FAQs

Q: What is a Foreign Qualification?

A: A Foreign Qualification is the process you go through to transact business in a state other than the state in which your company was formed. Basically, your Corporation or LLC is considered to be a domestic entity only in the state where it was formed. Think of this as your home state. In all other states, your company will be regarded as a foreign Corporation or LLC.

Q. What constitutes transacting business in additional states?

A. There are many factors used to determine whether a company is transacting business in a state. Some criteria evaluated include:

Whether the company has a physical presence in the state
Whether the company has employees in the state
Whether the company accepts orders in the state
Whether the company has a bank account in the state

This is not a complete list and different states may have different criteria. However, these are some common factors to consider when trying to determine whether it is necessary for your corporation or limited liability company (LLC) to file for foreign qualification. For questions regarding whether your particular company needs to foreign qualify, it is best to seek the advice of an attorney or accountant.

Q. What paperwork is required to foreign qualify?

A. In order to foreign qualify in another state, you must file a certificate of authority, which is a document that grants a foreign corporation or limited liability company (LLC) permission to transact business in that state.  In addition, most states require a certificate of good standing from your state of formation before granting a certificate of authority. The certificate of good standing is a document that states your company has met all the necessary requirements for corporations or LLCs imposed by your state of formation.

Q. What fees are required to foreign qualify?

A. Each state imposes a filing fee that must be paid when the certificate of authority is filed. These fees vary by state and by entity type. Additionally, foreign corporations and limited liability companies (LLCs) are required to pay taxes and annual report fees both in the state of formation and also in the state(s) of qualification on an ongoing basis.

Q. Who can file a foreign qualification?

A. There are no restrictions as to who can submit a foreign qualification filing. Anyone who prepares and files the certificate of authority and completes any additional requirements (i.e. providing the certificate of good standing) with the appropriate state agency is eligible to foreign qualify a business in that state.

Q. Do I need an attorney to file a foreign qualification?

A. No, an attorney is not a legal requirement to foreign qualify a business. You can prepare and file the certificate of authority yourself; however, you should understand the requirements of your intended state of qualification.

You can use our service to foreign qualify and save money on attorney fees. However, if you are unsure if a foreign qualification is required for your business, consult an attorney or accountant.

Q. What information is required on the certificate of authority?

A. As with the formation documents, the information each state requires in the certificate of authority differs. Commonly required information includes:

Company name
Date and state of formation
Name and address of registered agent in the state of qualification
Name and addresses of officers (for corporations)
Number of authorized shares and a listing of the different classifications of stock (for corporations)
Signature of a corporate officer (often the president) or member/manager information (for LLCs)
Additional information is also requested by some states:
Names and addresses of directors (for corporations) or members/managers (for LLCs)
Duration of the corporation or LLC (which is often perpetual)
Number of issued shares of stock (for corporations)
Financial information, including information on assets
Specific business-purpose clause outlining the type(s) of business the company will undertake

Q. What happens if my company name is not available in the state where I'd like to foreign qualify?

A. If your name is not available in the state of qualification, we will notify you and ask for a second name choice. You may also file for a doing business as (DBA) name, also called a fictitious, assumed or trade name, for your company in the state of qualification to transact business using a name other than the name on your certificate of authority.

Q. What are the consequences of not foreign qualifying?

A. There are a number of things that could happen as a result not foreign qualifying your company in states where you are transacting business. You lose access to that state's court system until you file a foreign qualification. This means if an employee or customer within a state in which you are transacting business were to sue your company, you would not be able to defend the lawsuit in that state's courts, because your company is not recognized as a business there. Typically, if this happened, your company would be given time to undertake the qualification process in order to allow you to defend such a lawsuit.

The second consequence of not foreign qualifying your business is that if this is later discovered, your company will typically be subject to fines and penalties, as well as being liable for the back taxes for the period in which it transacted business in the state without being foreign qualified.   If your company is going to be transacting business in any states outside your state of formation, you need to foreign qualify it in those states. Because what is considered transacting business can be a gray area, you should seek the advice of an attorney or accountant if you have questions as to whether your company is or will be considered to be transacting business in a particular state.

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Reinstatements & Dissolutions FAQs

Q: What is a Reinstatement?

A: A Reinstatement is a process, by which, your entity can be returned to good standing with the state in instances where the entity has fallen out of good standing or even been dissolved. For more information on Dissolutions, read “What is a Dissolution” below.

Q: What is a Dissolution?

A: Dissolutions are formal processes that end a businesses activities and “close the doors” of the business. This can be a voluntary step taken when the owner of a business decides that he or she no longer intends to conduct business or may be involuntary. In an involuntary case, the state dissolves the business due to failing to meet the states requirements of the business.

Q. What are some of the reasons why a business might dissolve?

A. Voluntary dissolution of a business might occur for a variety of reasons with the most common being management deadlock or unprofitability. A company’s state of formation can enact involuntary Dissolution on a company if that company has failed to file annual reports with the state, pay annual fees and/or taxes, or is encountering bankruptcy.

Q. Is the dissolution process different for a limited liability company (LLC) than for a corporation?

A. The existence of LLCs is less stable than that of corporations in the sense that an outside occurrence, such as a death of an owner, can end the company’s existence (depending on the operating agreement). Otherwise, the dissolution process is the same for both entities.

Q. What is reinstatement?

A. Reinstatement is the process of returning an inactive or non-compliant company to good standing within a state.

Q. When is reinstatement required?

A. A company may be required to undertake the reinstatement process when it has fallen out of good standing with its state of formation or state of qualification or is dissolved by the state due to failure to comply with the state’s rules and regulations. If a company is in bad standing with the state and wishes to dissolve, most states require a reinstatement to be filed prior to allowing the dissolution to be filed. Additionally, some states allow a reinstatement to be filed if the company has dissolved but would like to reverse the dissolution to begin transacting business under the same company.

Q. What risks are associated with being in "bad standing"?

A. Companies that are in bad standing long enough risk administrative dissolution or revocation by the state. When a state administratively dissolves a corporation or limited liability company (LLC) or the corporate or LLC status has been revoked, the benefits of being a corporation or LLC, such as the limited liability protection provided to the owners, are lost.

Q. What does the reinstatement process entail?

A. We help you through the reinstatement process by determining outstanding or overdue fees your company owes to the state; identifying steps your business must take to become compliant with the state; obtaining the forms you must complete; auditing your reinstatement forms for common errors prior to submission; submitting your completed reinstatement forms to the appropriate state agency or agencies; and notifying you when the reinstatement is complete.

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