Every year in New Jersey, legally formed businesses must file a report and pay a fee to the State. This allows businesses to maintain their legal status. If a business does not file and pay for two consecutive years and is notified, the State may revoke its status. As a result, the business can lose the legal powers conferred upon it, including:
- the right to conduct its business;
- the right to sue in court; and
- the exclusive right to use its business name.
A revoked business may have difficulty obtaining financing. The revocation, itself, could constitute a default under current financing agreements. A revoked business may encounter difficulties in a sale, merger or acquisition, too. Currently, there are approximately 370,000 inactive or revoked business entities in New Jersey.
Now, the good news: from March 1, 2020 through June 15, 2020, New Jersey will offer a streamlined process for revoked businesses to either reinstate their legal authority to operate or properly end their operations. This process will require payment of a one-time $500 fee (plus a convenience or credit card processing fee), and completion of an online application.
The streamlined process promises to:
- avoid the need (and cost) to apply for tax clearance;
- avoid the cost of multiple past due annual reports and other fees that likely would exceed the one-time $500 fee;
- offer expedited processing: one business day to reinstate or dissolve; and
- provide dissolving entities with definitive closure of the business.
The State’s business registry program and the public at large will benefit as businesses update their filings and return to compliance.
Doug Goldstein, Attorney at Law 