Why is your Texas LLC being terminated?
Ultimately, your registration was terminated due to some form of tax or administrative forfeiture. The most typical cause of this is failure to file your annual franchise report and pay any associated fees or taxes.
How much time do you have to reinstate your Texas LLC?
In Texas, you can reinstate your company at any time.
The process of reinstating a Texas LLC
Before they can restore, terminate, merge, or convert a business, both Texas-formed and out-of-state entities registered with the Texas Secretary of State (SOS) must fulfill all state tax filing requirements, which can be found here https://formfiles.justia.com/pdf/texas/0285/60.pdf.
Why should you reinstate your Texas LLC?
Reinstating your Texas Limited Liability Company (LLC) is an important step toward restoring its legal status and benefits. Let’s look at the main reasons why you should consider restoring your Texas LLC:
1. Legal Standing: If an LLC is dissolved or forfeited, it loses its legal status as a registered business in the state. Restoring it gives the LLC legal status, allowing it to do business, enter into contracts, and enjoy the legal protections provided to registered entities.
2. Business Continuity: Renewing your Texas LLC ensures the continuity of your business operations. Without reinstatement, you may encounter difficulties in carrying out routine business activities such as signing contracts, obtaining funding, or initiating legal action.
3. Liability Protection: Limited liability protection for LLC members is only valid while the company is in good standing. If your LLC is dissolved, members may be personally accountable for corporate debts and legal liabilities. Reinstatement helps to maintain the liability shield, which protects the members’ personal assets.
4. Contracts and Agreements: If your LLC has existing contracts, agreements, or responsibilities, you must reinstate them. Many contracts require that the business be in good standing with the state. Failure to reinstate may result in contract breaches and legal penalties.
5. Legal Remedies: A dissolved LLC may be unable to pursue legal action in case of a dispute. Reinstating the LLC restores its legal powers, allowing it to file lawsuits, defend against legal acts, and pursue legal remedies as needed.
6. Restoring Business Relationships: Restoring your Texas LLC fosters trust and relationships with clients, customers, vendors, and business partners. Operating with a dissolved status may cause stakeholders to be skeptical and hesitant to engage in transactions with your company.
7. Compliance with Texas regulations: LLCs must file annual reports and meet continuing duties. Reinstating your LLC displays your commitment to compliance, allowing you to avoid additional penalties and legal implications.
8. Preserving Intellectual Property: If your LLC contains trademarks, patents, or other intellectual property, keeping active status is vital. Restoring the LLC assures that these assets are protected indefinitely and eliminates the risk of losing exclusive rights.
9. Access to Financial Services: Financial institutions may need verification of good standing before offering loans, lines of credit, or other services. Reinstating your LLC is critical if you intend to seek finance or conduct financial transactions that necessitate a valid legal company.
10. Avoiding Dissolution repercussions: The longer an LLC is dissolved, the more serious the repercussions may grow. For noncompliance, Texas may administratively dissolve an LLC, resulting in increased expenses, loss of name protection, and difficulties reinstating.
Reinstating your Texas LLC is critical for ensuring legal compliance, business continuity, liability protection, and favorable stakeholder relationships. It enables your LLC to continue operations while safeguarding both the firm and its members from potential legal and financial liabilities.
How to reinstate your LLC
To ensure that your entity meets all of the conditions for reinstatement, please send these materials to the Comptroller.
Step 1: Submit any Annual Franchise Tax and Information Report (Public or Ownership) forms.
Step 2: Pay any tax, penalty, or interest payments that are due.
Before proceeding to Step 3, Steps 1 and 2 must be completed.
Step 3: Fill up and submit Form 05-391 https://www.dochub.com/fillable-form/15431-form-05-377, Tax Clearance Letter Request for Reinstatement (PDF), either by mail or online using Webfile.
Then, send these items to the SOS (see the Connecting with the Secretary of State section below).
Step 4: Once you have received Form 05-377 https://www.dochub.com/fillable-form/15431-form-05-377, Tax Clearance Letter from the Comptroller’s Office, submit it.
Step 5: Submit the SOS reinstatement forms.
Step 6: Pay SOS filing fees.
Key factors to remember while reinstating a Texas LLC
Identify the reason for dissolution:
Learn why your LLC was dissolved in the first place. Common reasons include failing to file yearly reports, failure to pay fees, and failure to maintain a registered agent. Addressing the fundamental cause is critical to avoiding future problems.
Retrieve and review company records:
Gather and analyze all essential papers for your LLC, such as the Certificate of Formation, past annual reports, and letters from the Texas Secretary of State. Ensure that you have a thorough understanding of the company’s position and obligations.
Address outstanding issues:
Resolve any lingering concerns that contributed to the LLC’s demise. This could include paying late fees, franchise taxes, and fines. Clearing these commitments is critical for effective reinstatement.
Update annual reports and information:
Yearly Reports and Information: Ensure that all yearly reports are current and have been filed with the Texas Secretary of State. Update any changes to member or manager information, registered agent information, and other pertinent data.
Appoint or update a registered agent:
To appoint or update a registered agent for an LLC, confirm their appointment. The registered agent is the official point of contact between the company and the state, so having an accurate and up-to-date registered agent is critical to compliance.
Prepare reinstatement documents:
Fill out the relevant reinstatement forms given by the Texas Secretary of State. The Application for Reinstatement is usually the main document. Ensure that all necessary information is correct and comprehensive.
Pay the requisite fees:
Pay the reinstatement fees. This covers both the filing fee for the reinstatement application and any outstanding fees or penalties payable to the state. Check the Texas Secretary of State’s website for the current fee schedule.
Maintain ongoing compliance:
To ensure continuous compliance, agree to following Texas state requirements after reinstatement. File annual reports on time, pay any fees promptly, and ensure that all information on file with the state is correct.
Seek professional guidance:
Consult with legal or commercial professionals during the reinstatement process. They may offer advice targeted to your specific circumstance, ensuring that all standards are satisfied and potential problems are addressed.
How much will it cost to reinstate in Texas?
The filing fee to reinstate an administratively dissolved LLC in Texas is $75. Expedited service costs an extra $25.
How long does it take to reinstate an LLC in Texas?
The Texas Secretary of State’s office normally handles filings in 5-7 business days. Expedited filings are typically processed within 1-2 business days.