From: Canoga Park, CA
Dear TaxMama,
If our California corporation was suspended, how do we get back in good standing,
what do we need to provide?
Or do we need to dissolve and start a new one?
Thanks
David
Hi David,
Ouch, that can be expensive.
No, don't dissolve...unless you owe California waaaaaaaaaay too much, but
didn't take any money out of the corporation.
You reinstate the corporation by
- Preparing and filing all outstanding tax returns.
- Paying the outstanding
state corporate taxes due, plus penalties and interest.
If you let it lapse for a few years, you might find that it is cheaper to
walk away and start a new one.
However, consider these issues:
- Is your business based on licenses (like contractor, professional licenses,
cosmetician, etc.)? If those licenses come from the State of California
and they are tied to your corporate name....you may need to resolve the suspension
to get your license reinstated.
- If you have contracts with customers under the old corporation, you would
have to get new contracts signed with a new corporation. Not always a great
idea to let your customers know you can't run your own business properly.
- Leases or loans - they might be in the name of the old corporation. You'll
need to transfer them to a new one. Again...how will that look? Or can
you even do that?
You'll find some more specifics about when and how you may abandon a corporation
in California in my
responses at Google Answers.
Best wishes,
Eva Rosenberg, MBA, EA
