How to Reinstate LLC in Texas: Guide for Texas Business Owners
In Texas, the Secretary of State can involuntarily terminate your LLC, LP, LLP, Corporation, or Nonprofit Corporation if you do not file required annual reports and pay the Texas franchise fee, maintain a registered agent, or pay filing fees. This can be stressful, and it put you at grave professional risk. But luckily, you can reinstate a Texas LLC or any other terminated business entity.
To help you, here is an overview of what you need to do if the Texas Secretary of State has involuntarily terminated your LLC If you need help, contact a Texas tax professional with experience with the LLC reinstatement process.
The following sections outline what you need to do to reinstate a Texas LLC To protect your business and personal assets, you may want to work with a local Texas tax pro experienced with LLC reinstatement. The process can be confusing without professional assistance.
What Does an LLC Termination Mean?
If the Texas Secretary of State terminates your LLC, you lose the benefits of having an LLC. An LLC establishes your business as a separate entity. Without the LLC, you become personally liable for business debts and lawsuits, and you will not be able to open bank accounts or take out business loans. Note however, that a termination does not impair the validity of any contract.
How Do I Reinstate My LLC in Texas After an Involuntarily Termination?
To reinstate your Texas LLC, you need to do the following:
- File the missing forms and pay any delinquent taxes and fees.
- Obtain a Texas tax clearance letter from the Comptroller of Public Accounts.
- Apply for reinstatement with the Texas Secretary of State.
How to File and Pay Late Franchise Taxes After Involuntary LLC Termination
To reinstate a Texas LLC, you must file your franchise tax reports and pay any tax, penalties, and interest due on your account. The franchise tax reporting process varies depending on the level of activity of your business. The Texas Comptroller has links to forms and instructions on its website.
In addition to paying the late franchise tax, you will also need to pay a $50 penalty for each late report. Normally, franchise taxes are due on May 15 or the following business day if the 15th falls on a holiday or weekend. If you are paying one to 30 days late, you will also need to pay a penalty of 5% of the assessed tax. A 10% penalty applies for payments made more than 30 days late. Interest begins accruing on the account once it is 61 days late. Interest rates fluctuate, but as of 2022, they are the annual prime rate plus 1.
How to Obtain a Tax Clearance Letter
To obtain a tax clearance letter, you must file Form 05-391 (Tax Clearance Letter Request for Reinstatement).It requires your business name, 11-digit Texas taxpayer number, and the address where you want the Comptroller to send the clearance letter. You can opt to receive the clearance letter by mail, fax, or email.
After you complete these activities, the Texas Comptroller will send you Form 05-377 (Tax Clearance Letter). Send the letter along with the reinstatement forms and filing fees to the Secretary of State.
Cost and Time to Get a Tax Clearance Letter
The timeline to receive a tax clearance letter can vary. If you request the letter through the mail, you should expect to wait three to four weeks for processing. The Texas Comptroller generally processes online requests right away. There is no cost for a tax clearance letter in Texas,
Secretary of State Texas Reinstatement for LLC
As explained above, you will need to send the Secretary of State a request to reinstate your LLC in Texas. Once you have met the filing and payment requirements and received the tax clearance letter, you will need to request LLC reinstatement from the Secretary of State. There are a different forms used to request the Secretary of State's reinstatement. The right form depends on your situation. Here is an overview of which forms to file based on the reason your LLC was terminated.
If failure to pay franchise tax involuntarily ended your LLC
You should file Form 801 (Application for Reinstatement and Request to Set Aside Tax Forfeiture) if failure to pay franchise tax, involuntarily ended your LLC or other business entity.
You should not use this form if you want to reinstate a voluntarily terminated LLC. This form also does not apply if the SOS terminated your business registration for an issue other than a tax forfeiture or if a court order terminated your business.
Texas Form 801 requires the legal name of your business, your SOS file number, the date of forfeiture or revocation, and your signature. You should also include a copy of your tax clearance letter and a $75 fee. If you do not have the SOS file number, you can submit the form without it, but this can create processing delays.
If issues other than unpaid taxes led to involuntary termination
In Texas, the Secretary of State can involuntarily terminate your business if you do not file required reports, pay fees or penalties, or maintain a registered agent. In these situations, you should file Form 811 (General Information — Certificate of Reinstatement) to reinstate your business.
Form 811 requires the name of your entity, the SOS file number, the jurisdiction of your business, and the date of termination. You also must detail the reasons for termination and explain what you have done to rectify the situation. Remember to include a tax clearance letter. The tax clearance letter is required unless you run a non-profit organization. Send a $75 filing fee with this form.
How To File Reinstatement Forms with the Texas Secretary of State
Once you complete the correct reinstatement form for your situation, you can mail, fax, hand deliver, or electronically submit it. To electronically submit your Texas LLC reinstatement request, go to SOS Direct or email the request to [email protected].
To mail the form, use this address:
Or you can hand deliver your form to the Secretary of State at this address:
Alternatively, you can fax the LLC reinstatement forms to (512) 463-5709. If you apply for reinstatement over fax, you should include Form 807 (Secretary of State Payment Form) with your credit card details.
How Long Does Reinstatement Take?
Typically, after you send the reinstatement forms to the Secretary of State, they are processed in about five to seven business days.
Potential Issues with Texas Business Reinstatement
In order to be reinstated, you need to complete the three steps explained above:
- File delinquent reports and pay late taxes, fees, penalties, and interest.
- Obtain a tax clearance letter.
- Request reinstatement from the Texas Secretary of State. However, there are some potential obstacles that may occur along the way.
Here is a breakdown of the issues you may face when you reinstate a Texas LLC or other business entity.
Business Name Taken by Another Entity
If Texas involuntarily terminates your business, your business name will no longer appear in the registry of business names. This means that other people can take your business name. If you apply for reinstatement and your name is no longer available, you will need to change your business name or get consent to use that name.
You May Need to Change Your Registered Agent
Your registered agent accepts tax and legal documents on behalf of your business, and you will need to provide their information when you request a Texas LLC reinstatement. However, in most situations, you cannot use the reinstatement form to name a new registered agent.
In this case, you will need to complete Form 401 (General Information -- Change of Registered Agent/Office). This form is fairly short and just requires details about your business and the registered agent. Include this form with your reinstatement request.
However, if your business was terminated due to issues with your registered agent, you can use the reinstatement form to name your new registered agent. If this describes your situation, you should note the details about the new registered agent on Form 811, and you do not have to include Form 401.
Cost to Revive an LLC in Texas
The cost to revive an LLC in Texas varies based on each situation. As noted above, the reinstatement fee with the Texas Secretary of State is $75 as of 2022. You can also pay $25 to have the form expedited. In addition, you will need to pay any taxes, fees, or penalties related to your involuntary business termination.
There is also a fee to change your registered agent with Form 401 or file a certificate of amendment. These forms have a $150 filing fee each.
If you decide to hire a Texas tax professional to help with the maze of filing requirements, you will pay them a fee as well. By hiring a professional, you ensure the process goes smoothly, and you get your business reinstated as quickly as possible.
Get Help With Texas LLC Reinstatement
Every year, the Texas Secretary of State involuntarily terminates tens of thousands of LLCs and other business entities. If your business is involuntarily terminated by the Secretary of State, you need to reinstate it. The process can be confusing, especially if you have a lot of unfiled forms or unpaid taxes. Issues such as another entity taking your name or changing your registered agent can also complicate the process.
You should work with a Texas tax professional. A Certified Public Accountant (CPA), Texas Attorney or an enrolled agent can help you with the process. How do you find someone to help with LLC reinstatement in Texas? By using TaxCure.
TaxCure's search feature lets you look for Texas tax prfessional who have experience with LLC reinstatement. Once you do a search, you can read the profiles of multiple professionals. Then, you can choose the tax pro that looks the best to you and give them a call for a free consultation. To get help now, search for a Texas tax pro today.