What To Do When Your Corporation Becomes Suspended
When a California corporation or business entity fails to pay its taxes, fails to file a corporate tax return, or fails to file an updated Statement of Information on time, their corporation may be suspended (California Revenue and Taxation Code, Section 23301 and California Corporations Code, Section 2205). Unfortunately, if your corporation does become suspended, it can restrict a lot of your business’s rights – which can be troublesome should you find out about the suspension in the midst of trying to exercise one of those rights.
What Suspension Means for Your California Corporation
A suspended California corporation loses a number of important rights and privileges, including but not limited to:
- Its right to bring a lawsuit
- Its right to defend itself in a lawsuit
- Its right to an appeal
- Its right to engage in any sort of real estate transaction
- Its rights to its corporate name
Furthermore, if the suspended corporation were to hire a California business attorney for any reason, and if the attorney were to learn of the corporation’s suspended status, the attorney would be required to immediately suspend services. If the attorney were to continue providing legal representation despite its knowledge of the corporation’s suspended status, the attorney could face serious legal consequences.
Additionally, while most rights would be restored once the corporation brings itself current on its taxes and Statement of Information, a name cannot be restored if a competitor takes the rights to it in the interim.
Restoring a Suspended Corporation
If your California corporation becomes suspended for any reason, you can get it reinstated if you fulfill the required obligations (i.e. filing a tax return and/or paying your tax debt). You may have to pay a penalty for failing to fulfill your obligations in a timely manner the first time, but once you do, your corporation will be issued what is known as a “Certificate of Revivor.” Most of your rights will be restored (with the exception of your name if it was taken), and you will be able to continue business as usual.
Consult a San Francisco Business Attorney
Losing your corporation rights can be frustrating and cause much unnecessary hassle – especially if you are in the middle of a lawsuit, need to file a lawsuit, or need to file an appeal. Losing your rights can be even more damaging if a competitor swoops in and steals your entity name while you do not have the rights to it. Because of this, it is imperative that you stay up to date with your taxes and Statement of Information. If your corporation does become suspended, consult with one of our San Francisco business attorneys at Lvovich & Szucsko, P.C. to learn more about how to reinstate it. We can also help you stay up to date with all the necessary regulations, that way you do not have to worry about suspension at all. Contact our Bay Area law firm at 415-392-2560, or fill out our online contact form to schedule a private consultation today.