Should I Reinstate My LLC or Start a New One?

Deciding whether to reinstate your dissolved LLC or start a new one can take time and effort. Each option has pros and cons, which can help you make the best choice for your business. This blog will explore why businesses get dissolved, the differences between reinstating an LLC and starting a new one, and how to do both. 

Why Was My Business Dissolved?

Your LLC (Limited Liability Company) might have been dissolved for several reasons:

1. Failure to File Annual Reports: Many states require LLCs to file annual reports. Missing these filings can lead to dissolution.
2. Nonpayment of Fees: Your LLC could be dissolved if you don’t pay the necessary state fees or taxes.
3. Violation of State Laws: Breaking state regulations can result in dissolution.
4. Inactive Status: If your business hasn’t been active for a certain period, the state might automatically dissolve it.

Understanding why your LLC was dissolved is crucial because it can affect your decision to reinstate or start anew.

Should I Reinstate My LLC or Start a New One?

Pros of Reinstating Your LLC

1. Continuity: Reinstating your LLC means keeping your original business name, EIN (Employer Identification Number), and business history. This continuity can be beneficial for maintaining relationships with clients, suppliers, and creditors.
2. Existing Contracts and Licenses: Any contracts or licenses your LLC had before dissolution will remain valid, saving you time and effort.
3. Brand Recognition: If your business has established a good reputation, reinstating helps preserve brand recognition.

Cons of Reinstating Your LLC

1. Costs: There may be reinstatement fees and penalties for missed filings.
2. Complicated Process: The reinstatement process can be complex and time-consuming, depending on why your LLC was dissolved.

 

Pros of Starting a New LLC

1. Clean Slate: Starting fresh allows you to correct past mistakes and restructure your business if needed.
2. New Opportunities: A new LLC can explore different business strategies and opportunities without being tied to past issues.
3. Simplicity: Sometimes, starting anew can be simpler and quicker than going through the reinstatement process.

Cons of Starting a New LLC

1. Loss of History: You’ll lose your business’s history, including any credit history, contracts, or brand recognition.
2. New EIN and Licenses: You’ll need to apply for a new EIN and any necessary licenses, which can be time-consuming.
3. Customer Confusion: Clients and customers might be confused about the change, which can impact your business relationships.

 

Starting a New LLC

If you decide to start a new LLC, here are the basic steps:

1. Choose a Name: Make sure it’s unique and complies with your state’s LLC naming rules.
2. File Articles of Organization: Submit these to your state’s business filing office. This document includes your LLC’s name, address, and details about its members.
3. Create an Operating Agreement: Although not always required, it’s a good idea to outline your LLC’s ownership and operating procedures.
4. Get an EIN: Apply for an Employer Identification Number from the IRS. This number is used for tax purposes.
5. Register for State Taxes: Depending on your state, you may need to register for sales tax, employer taxes, or other state-specific taxes.
6. Comply with Other Regulations: This might include obtaining business licenses or permits, depending on your industry and location.

 

How to Reinstate a Dissolved LLC

If you decide to reinstate your dissolved LLC, here’s what you generally need to do:

1. Understand the Requirements: Each state has its process for reinstating a dissolved LLC. Check your state’s specific requirements.
2. File Reinstatement Documents usually include a reinstatement form and any missed annual reports.
3. Pay Fees: This may consist of reinstatement fees, late fees, and any outstanding state fees or taxes.
4. Resolve Outstanding Issues: Address any reasons for the dissolution, such as filing missing reports or paying overdue fees.
5. Wait for Approval: Once you submit the necessary documents and fees, wait for your state to approve the reinstatement.

 

Using Business Services for Reinstatement

Several business services can help simplify the process of reinstating your LLC. Here are a few options:

 

 

Swiftfilings

Swiftfilings offers a quick and straightforward way to reinstate your LLC. They handle all the paperwork and ensure everything is filed correctly with the state. Using their service can save you time and reduce the risk of errors.

Northwest Registered Agent

Northwest Registered Agent is known for its excellent customer service. They provide personalized support and guide you through each step of the reinstatement process. They also offer various other business services, making them a comprehensive solution for your business needs.

Bizee

Bizee offers an affordable option for reinstating your LLC. They provide step-by-step instructions and support, helping you easily navigate the process. Bizee also offers services such as business formation, compliance, and more.

 

Conclusion

Whether to reinstate your LLC or start a new one depends on your specific situation and business needs. Reinstating can offer continuity and preserve your business history while starting anew, which provides a clean slate and new opportunities. Understanding the steps and requirements for both options is crucial for making an informed decision. If you choose to reinstate, consider using a business service like Swiftfilings, Northwest Registered Agent, or Bizee to streamline the process and ensure everything is done correctly.

Additionally, it’s essential to evaluate the long-term impact of either choice. Reinstating your LLC might be the best option if maintaining your brand’s continuity and existing relationships is crucial. However, if past issues or complications significantly hindered your business operations, starting a new LLC might be the way to a fresh start and new opportunities. By carefully weighing the pros and cons and taking the necessary steps, you can make the best decision for your business’s future.

Lastly, remember that whichever route you choose, staying compliant with state requirements and maintaining good standing is crucial to prevent future dissolutions. Regularly filing annual reports, paying necessary fees, and adhering to state regulations will ensure the longevity and success of your business.