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Are you doing business in California while your entity is suspended?  It could cost you $2,000 each year!

Source: California Franchise Tax Board 

Overview

When your business has been suspended or forfeited, it is not in good standing and loses its rights, powers, and privileges to do business in California.

To revive your business and be in good standing, you must:

  • File all past due tax returns

  • Pay all past due tax balances

  • File a revivor request form

If your business is tax-exempt and suspended, go to Apply for or reinstate your tax exemption for more information on how to revive.

Forms you'll need

Corporations

Limited Liability Companies (LLCs)

Why is my business suspended

Generally, businesses are suspended when they fail to:

  • File a return

  • Pay

    • Taxes

    • Penalties

    • Fees

    • Interest

You may be able to find out the reason for suspension using MyFTB.

Business entities registered with Secretary of State (SOS) must file and pay at least $800 franchise or annual tax from their registration date to current, regardless of business activity.

Visit due dates for businesses for more information on when to file and pay.

Secretary of State suspended

The SOS will suspend/forfeit your business for not filing the required Statement of Information. You can be suspended/forfeited by SOS and FTB at the same time.

If the SOS suspends/forfeits your business, they may impose a $250 penalty that we collect.

Visit SOS’s website for more information.

If your business is suspended

You cannot:

  • Legally do business

  • Sell, transfer, or exchange real property

  • File with an automatic extension

  • File a claim for refund

  • Start or continue a protest

  • Legally close or dissolve your business

  • Bring an action or defend your business in court

  • File or maintain an appeal before the Office of Tax Appeals

  • Maintain the right to use your business name

    • Secretary of State (SOS) will deny your revivor request if the entity name is no longer available.

  • Retain tax-exempt status.

    • We revoke an organization’s tax-exempt status as of the suspension date.

Your business may be subject to a $2,000 penalty per tax year for failure to file missing tax returns within 60 days after receiving a written demand to do so.

If your business cannot pay its taxes, we may make you personally responsible if you:

  • Took assets out of your business

  • Have unpaid loans to shareholders

  • Paid excessive salaries to officers

Visit Appeal of Howard Zubkoff and Michael Potash, Assumers and/or Transferees of Ralite Lamp Corporation (April 30, 1990) 90-SBE-004 for more information.

Click here for more information: https://www.ftb.ca.gov/help/business/my-business-is-suspended.html

steve@stevesimsea.com