If your company has fallen out of good standing in Delaware, you need to understand how to fix it. Companies typically lose their standing when they fail to file annual reports or pay franchise taxes on time.
The initial step for any business is to stay current on taxes, file annual reports and obtain all necessary licenses and permits. After that, you can obtain a Certificate of Good Standing to prove that your enterprise remains solvent.
Taxes
If your Delaware LLC or corporation is not in good standing, it could be labeled delinquent, void, suspended or dissolved. This may occur for various reasons but most commonly because taxes or fees have not been paid to the state.
A certificate of good standing is a document issued by the Secretary of State that verifies your business’ status. It typically includes your company name and registration number as well as some historical data.
It also verifies your company is current with franchise taxes and has filed an annual report. There are both short and long forms of this document.
Typically, obtaining a Certificate of Good Standing costs $50 and takes around two weeks to process from the state. However, if another filing with the Delaware Secretary of State for your company is pending, this may cause another delay in processing time.
Annual Reports
Maintaining an LLC in good standing with the state requires compliance. This may include having a registered agent, paying taxes and fees, filing annual reports, as well as keeping all licenses necessary to run your business effectively.
Delaware corporations that fail to file their annual report or pay franchise tax will be considered “out of good standing,” leading to a late fee and additional taxes, as well as interest on any unpaid balances, before being reinstated in good standing.
In some instances, Delaware corporations can be administratively dissolved if they fail to adhere to state requirements. This is especially true if they have been in default of both their annual report and franchise tax payments for two consecutive years.
Registered Agent
No matter if it’s a Delaware LLC or corporation, your business must maintain good standing to remain successful. That means meeting tax and annual reporting deadlines to avoid penalties or dissolution.
Furthermore, you need to select the proper registered agent in Delaware. This individual will be accountable for receiving important correspondence from both the state and other companies doing business with your firm.
Delaware LLC law requires a registered agent for each business entity that forms or registers in the state. This individual or entity must have an actual physical street address within Delaware, and will accept service of process on your behalf.
Change the registered agent of your Delaware LLC by submitting a form to the Department of State. This includes a Filing Cover Memo that notifies them you have changed agents and provides information about your new agent. You can submit this document electronically, by mail or courier service, or in person at Division of Corporations.
Obtaining a Certificate of Good Standing
If a Delaware LLC is not in good standing, this indicates it isn’t following state laws. This can have significant repercussions for your business – from getting better loan rates to securing permits and licenses.
The most frequent reason a company can become insolvent is failure to pay taxes or fees. Furthermore, they could lose their good standing if they do not maintain a registered agent in the state or fail to file their annual report on time.
Regaining your company’s good standing in Delaware is simple if you follow these a few simple steps. First, pay any overdue fees or taxes; then file all necessary documents and register as the registered agent for the business.
