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What does FTB suspended mean in simple terms?
What are the essential elements you should know!
In this article, I will break down the notion of FTB Suspended Meaning so you know all there is to know about it!
Keep reading as I have gathered exactly the information that you need!
Let me explain to you what is the SOS/FTB suspended meaning and why it’s important!
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FTB Suspended Meaning
FTB Suspended is a term used by the California Secretary of State to refer to a business entity that has been suspended.
There could be many reasons why a business entity may get suspended such as:
- Failure to file a statement of information
- Failure to file tax returns
- Failure to file tax exemption papers
- Failure to pay taxes
- Failure to pay penalties or interest
When a business entity registered in the State of California fails to meet its obligations, the CA SOS will designate the business entity as FTB Suspended on the California business registry found at https://businesssearch.sos.ca.gov/.
When your company is suspended, it loses its rights to do business in the state of California as I’ll discuss in more detail later.
In addition to your inability to transact business in California, you can also be exposed to other penalties such as a $2,000 penalty per tax year if you failed to file your tax returns after having received a 60 day notice from the state.
If your suspended status was due to unpaid taxes, you may personally be held liable for it so it’s important that you take the necessary measures to ensure that your company “default” is remedied as soon as possible.
FTB Suspended Consequences
Having your business flagged as FTB Suspended (or SOS/FTB Suspended) can have adverse consequences that you should consider.
According to the Franchise Tax Board, when your business entity is suspended, you cannot do the following:
- Do business in California
- Sell, transfer, or exchange real property
- File a claim or ask for a refund
- Start or continue a protest
- Initiate or defend against a civil lawsuit
- Close or dissolve your business entity
- Keep the right to use your business name
- Retain your tax-exemption status
- Your business contracts may be voidable or unenforceable
Fundamentally, for a business entity to have the rights and privileges to do business in California, it must be registered with the Secretary of State and be in good standing.
However, falling into FTB Suspended means that your company will no longer be able to do business in California, sell, transfer, or exchange real property in California.
Also, if your company enters into contracts during the SOS FTB suspended period, your contracts may be voidable.
Another important adverse consequence is that you may not only lose your ability to invoke company rights or defend them, but the business owners or shareholders can be personally held liable for the actions of the company.
In essence, you’ll lose the limited liability protection offered by corporations and business entities.
Resolve FTB Suspended Status
If your company status is set to “FTB suspended” by the California Secretary of State, the first thing you should do is to try to understand the reason why it happened.
For example, if the CA FTB Suspended status was issued because of your failure to file a statement of information, then you should remedy your failure.
Typically, the FTB suspended corporation status is issued when companies fail to pay their annual franchise fee, penalties, or interest that may be due to the FTB (the Franchise Tax Board).
It’s important to have a good understanding as to why the status FTB suspended has been issued by the SOS so you can take the necessary corrective actions to revive your business entity.
To revive your business, you must file one of the following forms:
- Application for Certificate of Revivor – Corporation (FTB 3557 BC)
- Application for Certificate of Revivor – Limited Liability Company (FTB 3557 LLC)
You should also consult with an experienced business lawyer, corporate lawyer, or tax lawyer to not only see how you can bring your company back to good standing but also limit or minimize the risk in your business operations (and personally) in the meantime.
FTB Suspended California Takeaways
So there you have it folks!
What is FTB suspended in simple terms?
How does California FTB suspended work?
In a nutshell, when your company has an SOS FTB suspended California status, it means that the Secretary of State has suspended your business.
In other words, your company is no longer in good standing with the SOS and has lost its rights, powers, and privileges to do business in California.
In most cases, an FTB suspended California Secretary of State status will be issued to a company that has failed to file past tax returns, failed to pay tax balances due, or its franchise taxes to the FTB.
If a company has been FTB Suspended CA, it means that it has lost its good standing status due to its failure to respect its registration obligations.
To prevent any risks of not being able to do business in California, losing your rights on your company name, having your contracts become voidable, or even losing your personal limited liability protection, you should immediately take corrective actions to revive your company.
Be sure to consult with a qualified business lawyer or tax attorney to guide you through this process.
I hope I was able to explain to you what is the FTB suspended definition, what does FTB suspended mean in California, and its consequences.
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