It is perfectly reasonable to wonder whether or not articles of organization expire. I wondered the same thing on my first LLC journey. And I found that when it comes to legal filing and compliance, being extra vigilant is always more of a positive than negative.
So do articles of organization expire? The answer is no, your filed articles of organization do not expire. The LLC Itself, though, may end up being dissolved for a number of reasons, which include failure to comply with annual requirements or exceeding the duration of existence.
There is also the question of yearly renewals, (or bi-yearly depending on the state in which your LLC was established), annual reports, and so on. We take a look at all the conditions necessary for expirations of LLCs and articles of organization below.
Expiration of Articles of Organization
Articles of organization are filed with the appropriate state body to verify the establishment of your limited liability company. The articles of organization consist of important information on your company, including name, location, management method and so on.
An important data which is also usually included in articles of organization is the duration of your LLC. This will specify how long your LLC is supposed to last. Now depending on the state wherein your articles of organization are filed, you may or may not have to provide a specific duration. For the latter, the state just assumes that your LLC will last perpetually.
In this case, your filed articles of organization can never really “expire.” In cases where specific durations are specified, though, then the LLC, and the articles of organization, can be said to have expired, or more specifically, ended.
Of course this isn't the only reason why an LLC may become obsolete or terminated. Depending on the operation of agreement and specific situations, there can also be pre-specified conditions for the expiration of a LLC.
Finally there are also a few legal factors, which we will discuss more below.
Does an LLC Last Forever?
As we've seen above, LLCs can in fact last forever. In fact, barring any ultra specific condition, there is nothing that specifies that you have to put a ceiling on how long your LLC is supposed to last when filing articles of organization.
When not indicated, most states automatically assume that your LLC will last forever, either way.
So there really isn't any reason to pigeonhole a company into specific duration beforehand. What happens if you want to end your LLC, though, you ask? Well, this can also be easily arranged, both after the fact, once you've arrived at the final, immutable conclusion that you do in fact want to end your LLC, or even before the fact, in a safe way that does not include you specifying a duration in your articles of organization.
We'll get into more details on how to properly dissolve an LLC below, but first, it is important to have in mind that your LLC can, in fact, last forever, and your articles of organization, once filed, can (and should) be optimized to last forever. You can do this by not setting a particular date of expiration, or indicating specifically that the company is intended for perpetual operation.
LLC Annual Requirements
Specifying a date of expiration on your articles of organization is one of the ways to ensure that your LLC is officially terminated at a specific point in time.
Doing this ensures that your company is no longer able to operate as a state approved LLC from that point onwards. This, however, is not the only reason why an LLC may become expired. The same thing may happen in other cases, one of which is failure to comply with the state's established annual LLC requirements.
What are state established annual LLC requirements, you ask? Well, annual requirements for a LLC varies from state to state, and whatever course of action you will follow must be based squarely on a state to state basis. Generally, though, some of the annual requirements for a LLC include:
The purpose of a registered agent is to receive important tax documents from the state on your behalf. A registered agent can be pretty much anybody from a member, external individual, to a representative provided by LLC filing services.
Failure to maintain a registered agent for your LLC, for example, can lead to the company being declared as inactive.
Depending on the state, failure to provide detailed annual reports on the company status may lead to expiration or dissolution of an LLC. Note that this is not necessarily pertinent to every state, and again must be treated on a state by state basis.
Other reasons such as bankruptcy, failure to meet state deadlines, failure to pay annual fees, and so on may also be eventual causes of the dissolution of an LLC. Furthermore, there are certain regulations and nuances that are only pertaining to few states that may also lead to the same outcome.
The most important thing is to carry out your due diligence to the fullest and ensure you comply.
What Happens When an LLC “Expires”?
So what happens when one of the conditions above isn't fulfilled and your LLC eventually runs out of good standing? Well, effective from the date of expiration, the LLC ceases to exist for all intents and purposes. The ramifications of this are endless, and can only be decided on a case by case basis.
For instance what happens when an expired LLC is sued after expiration? This depends on whether the LLC was dissolved voluntarily or involuntarily in the first place. If your LLC meets its expiration date it ceases to exist completely.
If your LLC is voluntarily dissolved, however, a series of processes with the state is initiated, after which a certificate of cancellation is issued, signifying the successful dissolution of the company.
So again, concerning the question of what happens when a dissolved LLC is sued, the answer is that it generally depends on the severity of the case. A wronged customer may be able to recoup his losses from the individual members, particularly in cases where members of the company engage in unlawful conduct.
This is called piercing the corporate veil.
How Do I Know if my LLC is Still Active?
Generally, you can tell whether or not your LLC is still active by checking in with the state. And again this tends to vary on a state by state basis.
In California, for example, you can tell if your LLC is still active by making use of the business entity search tool provided by the Secretary of State's office.
Here you will either see an “active” or “inactive” status displayed on your business page.
What Happens if You Don't Renew LLC?
As mentioned earlier, LLCs that don't get renewed become automatically dissolved. Also, depending on the particular state your LLC is registered in, the time set for renewal, and the grace period before final closure, may vary by a large margin.
How Do You Renew an Expired LLC?
LLCs that become inactive due to expiration or lack of compliance may be renewed by filing a renewal application form. Each state has their own requirements, but basically most renewal forms are available online for a fee.
An example of a place with such a straightforward renewal process is Los Angeles. Here your expired LLC can be renewed online by paying a renewal fee of $26.
How Do I Make an LLC Inactive?
For those who would like to voluntarily make their Limited Liability Companies inactive, you can do this by requesting for a certificate of cancellation from the state.
Of course all key members must agree to the dissolution and you must also give a cogent reason for requesting cancellation in the first place. This may range from bankruptcy to loss of a key member, among other reasons.
How Much Does It Cost to Reinstate an LLC?
As mentioned above, this varies from state to state. From the example given above, we see that in Los Angeles it costs $26 to reinstate a LLC. In Florida, however, there is a $100 reinstatement fee and a $138 annual report fee for the duration through which the LLC was dissolved in the first place.
Do Articles of Organization Need to be Notarized?
Yes, some states do require notarization for your articles of organization. However, some states don't. You can easily find the individual requirements for your specified states online.
Articles of organization, and the LLC as whole, will expire when the specified duration in your articles of organization is attained. There can also be a dissolution in cases of failure to pay annual fees, or meet certain requirements specified by the state.
Apart from involuntary dissolutions, however, an LLC may also be voluntarily dissolved by the owners or managers for a number of reasons. This will involve settling all liabilities and requesting for an official certificate of cancellation from the state.
Finally, depending on the state, an expired LLC may also be reinstated for a fee, granted all the conditions for reinstatement are met.