Whether for personal reasons or economic ones, there may come a time when you wish to put your business on pause. Here’s what you should know:
Why would I put my business on pause?
Taking a break from your business might be an economic necessity—but it can also be a personal choice. Consider these reasons to take a break:
- Planning – Working full-steam may be the only way you can get through all the tasks you need to complete in a given day, but it can be difficult to find the time to plan for your company’s growth.
- Working through a backlog – Taking time to get through an extensive “to do” list before new orders and tasks come in can be crucial to future success.
- Starting a new project – Creating a solid plan before kick-starting a new project may seem difficult if it means time away from work—but that might be just what you need to see your project through to the end.
- Re-calibrating goals – Companies can get off-track, but stepping back to assess what you’re doing and where you want to be as a company can help right your ship.
- Personal health – When stress at work follows you home, it can impact your health, and thus impact your business. Taking a break can put you in the right frame of mind to help your company thrive.
How do I put my business on pause?
There’s no formal procedure at the state level for temporarily halting your business operations. Pressing pause on your business is a personal choice, and can function in a number of different ways. For example, you might want to temporarily stop one aspect of your business, or you may close-up shop entirely for a year or more. If you put your business on hold for a year of more, there are some ramifications you’ll have to consider when it comes to your filing with the state.
Can I leave my business inactive with the state?
No—not unless you want to rack-up state fees in your time away from your company. Any business entity registered with a state government office is responsible for filing state reports and paying associated fees, even if the business itself is not in operation. You have two options for pausing your business while remaining in good standing with the state:
- Continue to file reports and pay fees – This will keep your business active with the state, even if you’re not actually conducting business in that time.
- Dissolve your business – Dissolving your business will render it inactive with the state, which means you won’t have to file any reports or pay any fees while your business isn’t in operation.
If you’re considering dissolution, check out Northwest’s Guide to Dissolving Your LLC or Corporation.
How long do I have to reinstate an inactive business?
It depends on the state. For example, Idaho allows businesses to remain inactive for up to 10 years—after that, reinstatement is no longer an option and you’ll have to form a new business entity. In Texas, if a business is rendered inactive for tax reasons there’s no time limit for when the business must reinstate—however, if a business is rendered inactive for non-tax reasons, it must reinstate within three years. If you plan on temporarily dissolving your business, it’s a good idea to check in with your secretary of state’s office (or the equivalent government agency in your state) to find out how long your business can remain inactive.
For more information about the reinstatement process, see: Revive or Reinstate a Corporation or LLC.