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Loren
Loren, Attorney
Category: Business Law
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Experience:  30 years experience representing clients .
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What does it mean when the California Secertary of State said

Resolved Question:

What does it mean when the California Secertary of State said that a LLC is not in good standing ?
Submitted: 1 year ago.
Category: Business Law
Expert:  Loren replied 1 year ago.
Thank you for using JustAnswer. I am JudgeLaw and I will do whatever I can to answer your question and provide you excellent service.

It usually means that the LLC has failed to file its annual report or not paid its annual taxes or fees. The next step would be administrative dissolution.

I hope this clarifies things.

Thank you.

JudgeLaw
Loren, Attorney
Category: Business Law
Satisfied Customers: 20790
Experience: 30 years experience representing clients .
Loren and 9 other Business Law Specialists are ready to help you
Expert:  Loren replied 1 year ago.
Thank you, XXXXX XXXXX your positive rating of my service to you. Let me know if you need more help or have future questions. I will be here for you. Just ask for me by name at the start of your question - "JudgeLaw" or use the following link (which you can bookmark in your browser):  http://www.justanswer.com/law/expert-JudgeLaw/
   

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Customer: replied 1 year ago.


It the LLC has failed to file its annual report or not paid its annual taxes or fees for three years what powers do it have ?

Expert:  Loren replied 1 year ago.
Thank you, XXXXX XXXXX your follow up question.

A business entity's powers, rights and privileges would be suspended or forfeited in California by (1) the Secretary of State for failure to file the required Statement of Information; and/or (2) the Franchise Tax Board for failure to file a tax return and/or failure to pay taxes, penalties or interest.

That means that the entity, in effect, ceases to legally exist and will be unable to defend or maintain an action in court.

Probably worse than that, the members will lose the protection from personal liability for obligations of the LLC.

I hope this answers your question.

Thank you.

JudgeLaw
Loren, Attorney
Category: Business Law
Satisfied Customers: 20790
Experience: 30 years experience representing clients .
Loren and 9 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.

The LLC did not do 1 and 2 for six stright years, and did not get suspended or forfeited in California, (1) they did fail to file the required Statement of Information for six stright years; and (2) They did not pay the Franchise Tax Board and they did not file a tax return and they fail to pay taxes, penalties or interest. The LLC canceled it self, and it still owes over $10,000.00 to the state.

So does this still mean that the entity in effect, ceases to legally exist during the six year time period above and during that time it was still unable to defend or maintain an action in court, enter in to contracts etc. because this business entity's powers, rights and privileges were forfeited in California even if the state had not taken any action against them during this period. can you please cite some case law on this.


 

Expert:  Loren replied 1 year ago.
Thank you, XXXXX XXXXX the follow up question and additional information.

The entity still exists until it is dissolved. It is just not able to conduct business or defend itself. In other words, it is still accruing taxes and penalties until it is dissolved. Additionally, any business done when the LLC was not in good standing could subject the members to personal liability for any claims accruing during that time. You are goint to want to resolve this and dissolve the LLC if it is not doing business.

Unfortunately, case law research is cost prohibitive, as subscription services can exceed $100 per hour.

I hope this is hlpful to you.

JudgeLaw

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