If your California corporation or LLC has FTB suspended status, the Franchise Tax Board has stripped it of the legal right to operate in the state, and you get that right back only by filing every missing return, paying every tax and penalty owed, clearing any Secretary of State delinquencies, and receiving a Certificate of Revivor. The entity still exists on paper. It just cannot function.
Why the FTB Suspends a Business
Three things put businesses on the suspended list. The first is missing tax returns. Every California corporation must file Form 100, and every LLC must file Form 568. Skip either, and the FTB can suspend your entity’s powers, rights, and privileges.1Franchise Tax Board. 2024 Corporation Tax Booklet 100 – Section: Suspension/Forfeiture
The second is the $800 annual minimum franchise tax. California charges it every year to LLCs and corporations regardless of whether the business made a dime.2Franchise Tax Board. Limited Liability Company Owners of dormant entities often assume an inactive business owes nothing. Falling behind on that $800 alone is enough to trigger suspension.
The third is the Statement of Information filed with the Secretary of State. Corporations file annually; LLCs file every two years. Miss it, and the Secretary of State can forfeit your entity, which in turn triggers an FTB suspension. The Secretary of State also charges a $250 penalty for delinquent Statements filed by for-profit entities.3California Secretary of State. Business Entities FAQs
What Your Business Cannot Do While Suspended
The FTB states that a suspended or forfeited entity “is not in good standing and loses its rights, powers, and privileges to do business in California.”4Franchise Tax Board. My Business Is Suspended In practice, that means:
- Any contract the business signs is voidable at the other party’s option, giving your counterpart an escape hatch they otherwise wouldn’t have.
- California courts will not let the business sue or defend a lawsuit. A case you file gets dismissed; a case filed against you cannot be answered until you reinstate.
- State and local agencies will refuse to issue or renew business licenses, professional licenses, and permits tied to the entity.
- The exclusive right to your business name is not protected. If someone else registers it during the suspension, you may have to pick a new name to reinstate.
The name issue catches owners off guard. The Secretary of State will deny the revivor request if the entity name has been taken, forcing an amendment to adopt a different name.
Personal Liability
Under California Revenue and Taxation Code Section 19719, anyone who exercises the powers of a suspended corporation or LLC can be held personally liable for the entity’s tax obligations. The corporate shield does not function during suspension. Officers, directors, and members who keep operating as if nothing changed put their personal assets on the line.
Contracts and Lawsuits Signed Under Suspension
Contracts made in California while an entity is suspended are voidable at the other party’s option under Revenue and Taxation Code Section 23304.1. That is not automatic voidness. The other side can walk away if they choose, but they can also decide to enforce the deal.
Reinstatement fixes most of this retroactively. Once you satisfy every reinstatement condition, Revenue and Taxation Code Section 23305.1 makes contracts entered during suspension enforceable as if they had never been voidable, provided a court has not already rescinded them.5California Legislative Information. California Revenue and Taxation Code 23305.1 The same works for litigation: a revived entity can validate procedural steps taken during suspension and continue with pending cases. The revival is “without prejudice to any action, defense, or right which has accrued” to other parties during the suspension, so it does not erase everything that happened.6California Legislative Information. California Revenue and Taxation Code 23305a
Move quickly. The longer suspension lasts, the more chances there are for contracts to be voided, deadlines to pass, and names to be lost.
How to Confirm Your Status
California gives you two free lookups. The Secretary of State’s bizfile Online portal searches by entity name or number and shows whether your business is active, suspended, or forfeited.7California Secretary of State. bizfile Online Search The FTB’s Self Serve Entity Status Letter tool lets you look up corporations and LLCs and print a status letter at no cost.8California Franchise Tax Board. Self Serve Entity Status Letter Lenders, escrow officers, and government contract managers often ask for that letter as proof of good standing, so it helps to check yourself first.
How to Reinstate the Business
Reinstatement means clearing every delinquency that caused the suspension, then filing a formal revivor application with the FTB. Skipping a step delays everything.
File Every Missing Return and Pay What You Owe
File all delinquent Form 100 returns if you are a corporation, or all delinquent Form 568 returns if you are an LLC. Pay the full balance of tax for each year, plus penalties and interest.
The penalties add up fast. If the FTB sent a demand letter and you did not respond, the penalty is 25 percent of the total tax assessed for that year.9Franchise Tax Board. Common Penalties and Fees Suspended or forfeited entities that fail to file within 60 days of a demand face a separate $2,000 penalty under Revenue and Taxation Code Section 19135.10Franchise Tax Board. FTB 7268 LLC – Limited Liability Company Collections Information A filing enforcement cost recovery fee is layered on top. Across several missed years, the bill grows quickly.
Fix Any Statement of Information Delinquency
If the Secretary of State was part of the problem, file the overdue Statement of Information and pay the $250 delinquency penalty. Both must be resolved before the FTB will process a revivor. Filings go through the bizfile portal.3California Secretary of State. Business Entities FAQs
Submit the Certificate of Revivor Application
Once returns are filed and balances paid, submit an Application for Certificate of Revivor. Corporations use Form FTB 3557 BC; LLCs use Form FTB 3557 LLC.11Franchise Tax Board. Application for Certificate of Revivor – Corporation The FTB checks with the Secretary of State to confirm your entity name is still available. If another business took it during the suspension, you will need to amend the articles and adopt a new name before revivor can go through.6California Legislative Information. California Revenue and Taxation Code 23305a
Walk-Through Revivor for Urgent Situations
Standard processing typically runs several weeks. If you have active litigation, an escrow closing, a pending loan, or a pending federal grant, the FTB offers walk-through revivor at its office locations. Requests must be submitted by 2:00 p.m., or 1:00 p.m. at the Los Angeles office, and every supporting document must be dated within 30 days of the request.4Franchise Tax Board. My Business Is Suspended
Keeping It From Happening Again
Most suspensions are not the product of complex tax disputes. They come from a missed filing or an unpaid $800 tax on an entity nobody was actively using. A California corporation or LLC still owes the annual tax and still needs to file returns until it is formally dissolved or surrendered with the Secretary of State. Calendar the filing deadlines. Keep your registered agent address current. Prevention costs far less than revivor.