What does suspended or forfeited mean?
An entity marked suspended or forfeited has lost its California powers, rights and privileges because it failed to meet state requirements. The company still exists in the state record. Formal closure is a separate process.
The Franchise Tax Board's suspended business page lists missing returns, unpaid taxes and a missing Statement of Information among the common causes. The Secretary of State and the Franchise Tax Board can each impose a suspension. Each agency also has its own requirements for clearing it.
At Corpgate, Inc., we see entities marked suspended on the Secretary of State record. Owners also ask us what an agent resignation means. By itself, an agent's resignation leaves the entity's status unchanged. Missing statements or unmet tax obligations can lead to suspension, even when an agent resignation also appears in the history.
Which agency suspended the business?
The agency named in the entity's status tells you where the problem sits: the Secretary of State, the Franchise Tax Board or both. The Secretary of State business entity FAQs explain the status codes. Agency notices and the entity record identify the outstanding requirements.
Secretary of State suspension
A delinquent Statement of Information is a common cause, and a current statement is required to cure that delinquency. The state also lists money owed to the Victims of Corporate Fraud Compensation Fund as a separate suspension ground. That is a separate balance to clear.
Franchise Tax Board suspension
Unfiled returns and unpaid taxes, penalties and interest belong to the tax agency. Its revival process calls for the missing returns, payment of outstanding balances and an application for revivor.
Suspension by both agencies
Both agencies must clear their requirements. Once the Secretary of State side is satisfied, its proposed relief letter goes to the Franchise Tax Board with the revival request. The letter shows that the state-record requirements are cleared; the tax agency still needs its returns and payments before revival can be completed.
A current Statement of Information names the agent for service of process. When that statement is needed to cure a delinquency and the former agent has resigned, it is also where the new agent is listed. The appointment concerns who receives legal papers; revival concerns the entity's state powers.
What does the revival process require?
FTB 3557 BC is the corporation revival application, and FTB 3557 LLC is the LLC application. The Franchise Tax Board revival instructions pair that application with two other requirements: filing past-due returns and paying the outstanding balances.
Receipts record payments. Filed returns account for the missing tax years. The Franchise Tax Board needs the required returns and payments, together with the revival application, before it can restore the entity's powers.
The Statement of Information goes to the Secretary of State. A current statement can cure that agency's filing delinquency while the Franchise Tax Board still has missing returns or unpaid balances. The Statement of Information reference page leads to the full filing guide.
A company name can present another issue. The Franchise Tax Board says a suspended entity may need to change its name before revival if another business has taken it. Paying the tax balance settles the money side; name availability is a separate requirement.
The entity record, agency letters and filed documents show which work is complete. A newly appointed agent receives legal papers for the business. The returns, payments and agency approval remain part of the entity's revival process.
What taxes and penalties can remain?
A revival can involve several tax years, unpaid tax, penalties and interest. The balance depends on the missing filings and payments. The Franchise Tax Board's penalties and interest page separates the charges by the failure that caused them.
The listed Statement of Information nonfiling penalty is $250 for a corporation or LLC. It comes on top of the ordinary statement filing fee. The Secretary of State requests the penalty, and the Franchise Tax Board assesses and collects it.
The $2,000 suspended-business penalty has a specific trigger: failure to file a return within 60 days after a written demand. The Franchise Tax Board may assess it for each taxable year covered by that failure. The suspension page gives the condition; the word “suspended” in a business record alone leaves that question open.
Tax can continue while a business is inactive. The California $800 tax guide explains why a company that stopped earning money can still have annual tax and filing duties, as well as balances from earlier years.
What can a suspended business do?
Selling or transferring real property and bringing or defending a court action are among the powers restricted during suspension. The Franchise Tax Board also lists legally doing business, receiving tax refunds, obtaining filing extensions and closing through ordinary termination.
These restrictions apply to the entity. An owner may have stopped taking customers or emptied the business bank account while the state still lists an existing, suspended company. “Inactive” in everyday speech describes its operations; “suspended” describes its recorded standing.
The agency's list of suspended-business restrictions also covers contracts made during suspension. The contract, timing and court case matter alongside the status entry. A licensed California attorney can explain how the particular facts affect a contract dispute or lawsuit.
What if the business has already stopped operating?
An FTB-suspended entity generally needs revival before ordinary dissolution, surrender or cancellation. California also has a separate voluntary administrative relief program for eligible businesses that have stopped operating.
The voluntary administrative dissolution and cancellation program covers eligible domestic corporations and LLCs. Conditions include having been registered for more than 12 months, having no assets and having stopped or never started business. An application starts the agency's review; state termination paperwork and any liabilities outside the relief remain separate.
The guide to closing a California corporation or LLC explains the state filings, final return and administrative program. A closed shop can still have an open entity record. Those filings are what complete the state and tax records.
Questions about suspension
Will changing the registered agent revive the company?
No. Changing the agent leaves the entity’s revival requirements in place. A new agent may be named in the current Statement of Information, while missing tax returns, unpaid balances and each suspending agency’s approval still have to be addressed.
Does filing a Statement of Information clear an FTB suspension?
A Statement of Information addresses the Secretary of State filing requirement; FTB revival requires its own returns, payments and application. The two agencies clear their own records.
Does every suspended business owe a $2,000 penalty?
No. The penalty described above depends on a return remaining unfiled for 60 days after a written demand. That condition has to be established separately from the suspension itself.
Can an inactive LLC be reactivated?
An LLC that merely stopped operating may still be active in the state record. Suspension or forfeiture calls for the revival process described here. Cancellation means the entity has been terminated, a different status with different questions about restoring it.
How long does revival take?
Revival time depends on the missing tax years, balances, agency filings and any name issue. Each agency determines when its requirements have been met.