It is common for the states to forfeit or terminate legal entities if the owners fail to make annual filings or even state tax filings. The state will then terminate the business entity’s right to transact business in the state. If a business entity has forfeited its right to transact business in a state, it may be necessary to reinstate the entity in order to continue doing business in that state. There are several reasons why this might be necessary:
- To be able to continue to operate in the state: States generally have laws that can bar your business from transacting or carrying on business in the state if you fail to keep your legal entity in compliance by making annual filings.
- To keep your business’s legal status current: By making annual filings, you can ensure that your business’s legal status is up to date and that it is in compliance with state laws and regulations.
- To protect your business’s legal protections: In many cases, businesses are granted certain legal protections, such as limited liability protection for the owners, when they register. These protections can be lost if the business fails to make the required annual filings.
- To avoid penalties: If a business fails to make its annual filings, it may be subject to fines or other penalties.
- To take advantage of state-specific incentives: Some states offer specific incentives, such as tax credits or breaks or grants, to businesses that register and operate within their borders. A business entity may lose the ability to take advantage of these incentives if they fail to stay in compliance with state laws.
- To maintain transparency: Annual filings can help to ensure that businesses are operating transparently and in compliance with state laws and regulations. This can be important for building credibility with customers, partners, and other stakeholders.
We can help with your annual compliance and help you avoid these problems.