In 2023, almost 5.5 million new businesses were created in that year alone. It shows just how strong the entrepreneurial spirit is in the nation, with new dreams brought to life daily.
However, not all dreams are meant to last. You may have formed a limited liability company (LLC) a few years ago, but abandoned and dissolved it when it didn’t go as expected. But now, you’ve got a renewed sense of business, and you want to give it another try.
Are you now wondering, “Should I reinstate my LLC or start a new one?” Then read on. We’ll give you all the details you need to know.
Should I Reinstate My LLC or Start a New One?
There isn’t a single “right” answer here; for some people, it may be wiser to reinstate their old LLC, while for others, it’s better to start anew.
To determine which path you should take, here are the considerations that’ll help you out.
Assets and Liabilities
Does your old LLC has valuable assets or liabilities that you want to either retain or address? Then reinstating the LLC may be the better option. Starting a new LLC would mean leaving behind any assets or liabilities associated with the old one.
Take stock before making a decision. Assets could include property, equipment, intellectual property, or customer lists. Liabilities might include debts, outstanding contracts, or legal obligations.
If the assets outweigh the liabilities and are integral to your business operations, you’re better off reinstating the LLC.
Brand Recognition
If your old LLC has built brand recognition or goodwill in the market, reinstating it might be advantageous, as you can continue to benefit from existing customer relationships and brand equity.
Customers and suppliers may already be familiar with your brand, which can save time and resources when rebuilding brand awareness. In addition, maintaining continuity in your brand can help preserve customer loyalty and trust.
Legal Obligations
Review any legal obligations or contracts tied to your old LLC. Reinstating it may be necessary to fulfill these obligations or to keep up with contractual agreements.
For example, if you have ongoing leases, licenses, or agreements with suppliers or clients, reinstating the LLC can ensure that these contracts remain valid.
Cost and Effort
Evaluate the cost and effort involved in reinstating the old LLC vs starting a new one. This includes filing fees, legal fees, and administrative tasks required for both choices.
Reinstating the old LLC typically involves paying reinstatement fees, filing paperwork with the state, and possibly resolving any outstanding compliance issues. On the other hand, starting anew LLC requires filing formation documents, obtaining necessary licenses and permits, and establishing new business accounts.
If you decide to start a new LLC, we can help with our business registration service. We serve all 50 states, so the process is easy for you.
A Clean Slate
Should you want a fresh start, starting a new LLC gives you exactly that. It allows you to restructure your business if needed, without carrying over any past issues or liabilities from the old LLC.
Does your old LLC have significant debts, legal disputes, or negative associations? Then wiping the slate clean may be the best choice. However, consider whether you’re willing to forfeit any valuable assets or brand recognition tied to the old LLC in exchange for these new beginnings.
Tax Implications
Consult with a tax professional to understand the tax implications of both options. Depending on your jurisdiction and the specific circumstances of your business, reinstating the old LLC may have different tax consequences compared to starting a new one. For instance, your tax treatment can differ in capital gains taxes, loss carryforwards, or deductions.
A tax professional can help you minimize tax liabilities and maximize tax benefits based on your chosen option.
Future Plans
Think about your future business plans and whether reinstating the old LLC aligns with your long-term goals. Starting fresh may be beneficial if you’re looking to pivot or rebrand your business significantly. It can also be advantageous if you plan to expand, as it offers more flexibility and opportunity for growth.
However, if you’re satisfied with your current business model and want to continue operations without major changes, reinstating your LLC may be the wiser choice for keeping the status quo going.
Can a Dissolved LLC Be Reinstated?
Yes; in many jurisdictions, a dissolved LLC can typically be reinstated. The process on how to make an LLC active again varies depending on the laws of the state or country where your LLC was formed and dissolved. However, here’s a general overview of the steps to reinstate an LLC.
Determine Eligibility
Before beginning the reinstatement process, make sure that your LLC is eligible for reinstatement according to the local laws. Eligibility criteria may include resolving any outstanding compliance issues, paying any delinquent fees or taxes, and meeting specific other specific requirements.
File Reinstatement Forms
Obtain the necessary reinstatement forms from the appropriate state or country government agency responsible for business registrations. Usually, these forms will require information about the LLC, its members or managers, the reason for dissolution, and any steps taken to resolve outstanding issues.
Resolve Outstanding Obligations
As we’ve said earlier, before reinstatement can be approved, you may need to resolve any outstanding obligations. These include unpaid fees, taxes, or penalties, so resolution may involve paying delinquent fees, filing overdue tax returns, or addressing compliance issues that led to the LLC’s dissolution.
Submit Required Documentation
Along with the reinstatement forms, you’ll likely need to submit any required documentation or supporting materials, such as proof of payment for outstanding fees or taxes, updated member or manager information, or a statement of good standing from the state tax authority.
Pay Reinstatement Fees
Reinstating an LLC usually incurs reinstatement fees, which vary depending on where your LLC is based and the reason for dissolution. In general, expect to pay a couple hundred dollars.
Wait for Approval
After submitting the reinstatement forms and required documentation, the state or country government agency will review your application. If everything is in order and all outstanding obligations have been resolved, they’ll approve the reinstatement and restore your LLC’s active status.
This can take anywhere between a few business days to two weeks. However, in some states, you can pay an expedited fee to hear back within 24 hours, so keep that in mind as a choice.
Update Records
Once your LLC’s reinstated, ensure that all relevant records and filings are updated to reflect its new status. This may include updating business licenses, permits, bank accounts, and any contracts or agreements that reference the LLC’s status.
Consider Your Personal Situation to Pick Wisely
With the question, “Should I reinstate my LLC or start a new one?”, the answer really depends on your personal situation. Consider why your LLC was dissolved in the first place, and what you hope to achieve with your new business. Think about the other information provided in this article, and you’ll make a better-informed decision.
If you’re unsure, it’s always great to consult with legal, financial, and tax professionals. They’ll be able to point you in the right direction with their experience and expertise.
Sign up with Business Anywhere if you want to start a new LLC. It’s a simple process, and you’ll be up and running within a few days.
