How to Reinstate LLC in Texas: Guide for Texas Business Owners
In Texas, the Secretary of State can involuntarily terminate your LLC, LP, corporation, or nonprofit corporation if you don't file required annual reports, file and pay the Texas franchise fee, maintain a registered agent, or pay SOS filing fees. This can be stressful, and it puts you at grave professional risk. But luckily, you can reinstate a Texas LLC or any other terminated business entity.
To help you out, here is an overview of what you need to do if the Texas Secretary of State has involuntarily terminated your LLC or other Texas business. If you want help, contact a Texas tax pro with experience with Texas LLC reinstatement.
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 the delinquent tax and fees.
- Obtain a Texas tax clearance letter from the Comptroller of Public Accounts
- Apply for reinstatement from the Texas Secretary of State (SOS)
The following sections outline what you need to do to reinstate a Texas LLC or other business entity. 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 an LLC. This structure establishes your business as a separate entity. Without the LLC, you become liable for business debts and lawsuits, and you won't be able to open bank accounts or take out business loans.
In many cases, when the SOS terminates your Texas LLC, you will not be able to operate your business. You won't be able to sell products or services. You also have to deal with the process and fees associated with reinstating your LLC.
If your corporation is terminated, you won't be able to operate. If your non-profit is terminated, you won't be able to accept donations. The state's acknowledgment of your business entity is critical. If it's terminated, you lose a lot of advantages.
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 how much tax your business paid the previous fiscal year. The Texas Comptroller has links to forms on 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're 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's 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). This form is very short and easy to complete. It just 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.
However, filling out the form is the easy part. The important thing is to make sure that your business is compliant with the state's tax reporting and payment obligations. If you've already submitted everything, you can send the tax clearance letter request independently. If you still need to file the reports, you can send them along with the request for the clearance letter.
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, but of course, you do need to pay the tax and penalties to receive this letter.
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 few different forms 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 why you lost your LLC.
If not paying franchise tax involuntarily ended your LLC
You should file Form 801 (Application for Reinstatement and Request to Set Aside Tax Forfeiture) if not paying 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 doesn't 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 don't 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 don't 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. It's required unless you run a non-profit organization. Send a $75 filing fee with this form.
If your LLP was involuntarily terminated due to not filing annual reports
To reinstate your Limited Liability Partnership (LLP) after involuntary termination, you need to file Form 816 (Application for Reinstatement of Limited Liability Partnership). This form also requires your entity name, Federal Employer Identification Number (FEIN), and date of termination. You must also note why the business was terminated and how you rectified the issue.
You should also include a tax clearance letter from the Comptroller of Public Accounts and Form 713 for every year you were delinquent plus the current year. Then, include a $75 filing fee for this form. You should also include the fees for the annual reports. The filing fee is $200 for each general partner. You must submit all of this information within three years of the date your business was terminated.
Additionally, you need to include a $75 filing fee for this form. You should also include the fees for the annual reports. The filing fee is $200 for each general partner. For the current year, use the number of partners on the date you file. For previous years, use the number of partners on the date the return was due.
How To File Secretary of State Reinstatement Forms
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 a Secretary of Statement Reinstatement Take?
Once you've met all of the requirements and filed all of the forms, you're almost done. Typically, when you send the forms to the Secretary of State, they get processed in about five to seven days. Then, it should be back to business as usual.
Potential Obstacles With Texas Business Reinstatement
Getting your business reinstated is relatively straightforward. You just need to complete the three steps explained above: 1) File delinquent reports and pay late taxes, fees, penalties, and interest. 2) Obtain a tax clearance letter. 3) Request reinstatement from the Texas Secretary of State. However, there are some potential obstacles that can pop up on 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 taken, you will need to change your business name or get consent to use that name.
To get consent to use a similar name, you need to contact the business that is using the name you want. Then, fill out Form 509 (Consent to Use of Similar Name). This very brief form simply requires your proposed name and the name of the existing business. The business owner or authorized representative must sign the form to give you permission. Include this form when you request reinstatement.
If the business's name is identical to yours or if they don't want to give you permission to use a similar name, you will need to choose a new name. This requires you to amend your formation documents. To amend, file Form 424 (General Information — Certificate of Amendment). Do not try just to set up a new LLC. This will be more expensive, and it will create obstacles in your reinstatement process.
You 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 don't have to include Form 401.
To minimize obstacles during the reinstatement process, you should work with a Texas tax pro. They can look at the situation, identify any potential problems, and make sure that your business gets reinstated as seamlessly as possible.
Cost to Revive an LLC in Texas
The cost to revive an LLC in Texas varies based on the situation. As noted above, the reinstatement fee is $75 as of 2022. You can also pay $25 to have the form expedited. On top of that, you will need to pay any taxes, fees, or penalties related to your involuntary business termination.
For instance, if you didn't pay franchise tax, you will need to pay the franchise tax plus any late fees, penalties, or interest on your account. If your business was terminated due to not filing annual reports, you will need to pay the filing fee associated with the report.
There is also a fee if you need 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 pro 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 revoked, 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. Certified Public Accountant (CPA) and 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 pros 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.