Can I Reinstate an Inactive Corporation?

A corporation must remain in good standing with its home state to maintain its business registration and license to operate. Every state has different requirements that a corporation must fulfill annually to remain in compliance. Corporations that are inactive or non-compliant are put on suspended status by the state and can apply for reinstatement in some states and under certain circumstances.


Every corporation must register with a home state by filing articles of incorporation. This state is considered the corporation's "domicile," and it has the authority to regulate the corporation because it was formed under state law. Registration is not a one-time thing. It's actually in the nature of a master business license that must be maintained on an ongoing basis. If a business operates within the state without a valid registration, the owners are subject to significant penalties and fees.

Good Standing

States determine the types of filings a corporation must make and the types of taxes and fees it must pay every year. A typical state might require a corporation to file an annual report with a filing fee every year. Another state might require an annual report, a corporate state income tax return and the payment of a franchise tax. A corporation must comply in a timely manner with annual requirements to keep its state registration in good standing.


Corporations that do not make their annual filings or pay annual taxes and fees can be suspended by the state. Many states will put a corporation on inactive status once a certain amount of time has passed with the corporation in noncompliance with the law. Alternatively, the board of directors or shareholders of a corporation can voluntarily put the corporation on inactive status in many states if the corporation plans to suspend operations for a length of time.


Most states allow a corporation that has been voluntarily or involuntarily suspended to apply for reinstatement. The way to determine if your state allows reinstatement is to go to the corporations section of the website for the secretary of state and look in the forms section for an "application for reinstatement." Typically, a corporation can reinstate with the payment of a fee, provided it remedies its annual obligations default. Some states put a time limit on reinstatement, such as 36 months. For example, in Texas, a corporation that has been suspended for tax reasons can apply for reinstatement at any time, but the state applies time limits to corporations that were suspended for any other reason.


About the Author

Terry Masters has been writing for law firms, corporations and nonprofit organizations since 1995. Her online articles specialize in legal, business and finance topics. She holds a Juris Doctor and a Bachelor of Science in business administration with a minor in finance.