Reinstatement vs. Forming a New LLC: Which Is Right for You?

When an LLC has been administratively dissolved, some owners ask whether it would be easier to form a new one. Sometimes it is, but in most cases reinstating the existing company is simpler, cheaper and safer.

Why reinstatement is usually the better choice

Continuity. In many states, an approved reinstatement relates back to the date of dissolution, so the company is treated as if it had never stopped existing.
Contracts, accounts and licenses. Leases, vendor agreements, bank accounts, merchant accounts and licenses are tied to the existing entity. A new LLC would need each of them reassigned or reopened.
EIN and tax history. The company keeps its EIN and tax history. A new LLC needs a new EIN.
Name. Reinstating protects your name. If you form a new entity, the old name may still be tied up on state records.
Liability. Reinstatement can help protect owners from personal liability for business carried on while the company was dissolved.

When forming a new LLC can make sense

The state's deadline for reinstatement has passed
The back fees, penalties and taxes owed are greater than the value of keeping the entity
The company has no contracts, accounts, licenses or history worth keeping
You're changing the ownership structure or business anyway

Even then, the old company's obligations don't disappear. Past-due amounts may still be owed, and the old entity may need to be formally closed.

Comparing cost

A new LLC means a new formation fee, a new EIN, new bank accounts and reassigned contracts. Reinstatement costs the state reinstatement fee plus any past-due reports and fees, which many states would require you to pay anyway. For most small companies, reinstatement comes out ahead.

A quick way to decide

If the company has a bank account, a contract, a license, a lease or a name you want to keep, reinstate it. If it has none of those and the back fees are large, ask a tax professional or attorney whether starting over makes sense.

Ordering reinstatement from us

Our order form takes about five minutes. We review your company's status, confirm any past-due amounts with you before filing, and submit your reinstatement within 1 business day. The price is $49 plus your state's reinstatement fee. Questions? Call (888) 489-8236.

This article is for general informational purposes only and is not legal or tax advice. Requirements vary by state; consult an attorney or tax professional about your situation.