Why Do Business Entities Get Dissolved?
Business entities can be dissolved for a variety of reasons, and understanding why your entity was dissolved is the first step toward reinstatement. Dissolution generally falls into two categories: administrative and voluntary.
Administrative Dissolution
Administrative dissolution occurs when the state involuntarily dissolves your entity because it has failed to meet its compliance obligations. The most common causes include:
Administrative dissolution is the most common type, and it is almost always the result of a compliance oversight rather than an intentional decision.
Voluntary Dissolution
Voluntary dissolution happens when the business owners deliberately choose to dissolve the entity. This may occur because the business is closing, the members or shareholders have decided to part ways, or the entity is being merged into another company. Voluntarily dissolved entities can sometimes be reinstated, but the process may be more complex.
Consequences of Dissolution
Operating a dissolved entity or leaving it dissolved has serious consequences:
The Reinstatement Process
Step 1: Determine Your Entity's Status
Contact the Secretary of State's office in the state where your entity was formed (or check the state's online business search tool) to confirm your entity's current status and the reason for dissolution. This will tell you exactly what needs to be resolved.
Step 2: Cure the Compliance Deficiencies
Before you can reinstate, you must resolve whatever caused the dissolution:
Step 3: File a Reinstatement Application
Most states have a specific reinstatement form (often called an Application for Reinstatement, Certificate of Reinstatement, or similar). This form is filed with the Secretary of State along with:
Step 4: Receive Confirmation
Once the state processes your reinstatement and all fees are paid, your entity will be restored to active or good standing status. In most states, reinstatement is retroactive, meaning the entity is treated as though it was never dissolved.
Timelines and Costs
Processing Times
Reinstatement processing times vary by state:
Typical Costs
The total cost of reinstatement depends on how long the entity has been dissolved and what compliance obligations were missed:
For an entity that has been administratively dissolved for several years, the total cost of reinstatement can range from a few hundred dollars to several thousand dollars.
When Is It Too Late to Reinstate?
Most states allow reinstatement within a specific window of time after dissolution. This window varies significantly:
If your entity was voluntarily dissolved, the reinstatement window may be different (and often shorter) than for administrative dissolution. Check with your state's Secretary of State office to understand the specific deadlines that apply.
How to Prevent Future Dissolution
Once your entity is reinstated, take steps to ensure it does not happen again:
How CLS Can Help
CLS assists businesses with reinstatement in all 50 states. We research your entity's compliance deficiencies, prepare and file all delinquent reports, handle the reinstatement application, and set up ongoing compliance monitoring to prevent future issues. Contact us for a free consultation, or visit our order page to get started with reinstatement today.