Can I Reinstate an Inactive Corporation?

By Cindy DeRuyter, J.D.

Can I Reinstate an Inactive Corporation?

By Cindy DeRuyter, J.D.

If you established your business as a corporation but the company is no longer "active" according to state records, you may be able to reinstate its registration. Reinstatement requirements, procedures, and fees are state specific, so you may need to contact the Secretary of State or other business authority responsible for corporate entity registrations to determine what steps you should take.

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Corporate Registration Basics

When a corporate organizer wants to form a legal corporation recognized by state law, the first step is filing a legal document called articles of incorporation with the state. This document provides the state with information about the business including its name, address, officers, organizer, and an address for service of process. Because corporations issue shares of stock, the articles also identify how many shares of stock the business is issuing.

Corporations are separate legal entities with their own tax identification numbers and identities apart from the person or people who own corporate stock, called shareholders. In theory, a corporation can exist forever. Its shareholders, board of directors, managers, and employees may come and go over time, but the corporate entity can remain in force. In some states, corporations automatically have perpetual existence without annual filing requirements. In most states, however, the corporation must maintain its state registration(s) by filing renewal paperwork every year.

Potential Reasons for Inactive Status

A corporation may have an inactive status either because of a voluntary or an involuntary dissolution.

When a corporation's shareholders voluntarily decide to shutter the business, someone must file articles of dissolution or other documents required by the state. This step is important because it officially terminates the company. After a voluntary corporate dissolution, creditors can't come back after the fact and present new claims for payment. State statutes dictate the additional steps corporations must take for voluntary dissolutions. Generally speaking, those steps include identifying, notifying, and paying the company's creditors and distributing remaining corporate assets to the shareholders.

If you want to dissolve your corporation, you can get help from a licensed attorney in your state or you can choose a reputable online legal services provider to assist with the process.

Sometimes, corporations are inactive because the state involuntarily dissolved them. This may occur if the company failed to submit required reports, tax filings, or other required administrative filings. Implementing internal policies and procedures and appointing a responsible person to handle renewals and filings can limit your company's risk of involuntary dissolution because of an administrative oversight.

Reinstating an Inactive Corporation

If your state's laws allow for reinstating inactive corporations, you may be able to file paperwork and pay fees to reactivate the company. Some states' laws allow for corporate reinstatements but levy fines and penalties in addition to administrative fees. Other states impose strict time periods during which they allow reinstatement of involuntarily dissolved companies. If you apply for reinstatement after the end of the reinstatement window, the state will likely deny your application.

Contact your Secretary of State's office or other state agency responsible for registering corporations to determine whether and how you can reinstate a dissolved corporation. A small business attorney licensed in your state can also be a valuable resource and may handle the reinstatement process for your company.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.