Starting a business is a leap of faith, so when the paperwork you’ve submitted to start an LLC or corporation gets rejected by the state, you might feel like you failed to stick the landing. But don’t panic. In most cases, the Secretary of State’s office will give you time to correct the error and re-submit your filing. Still, it’s always better to avoid getting rejected in the first place, which is why you should carefully review your application and look out for common mistakes. With the help of the Northwest filing team, we’ve compiled a list of the most common reasons corporate filings get rejected.
What Happens if My Corporate Filing Is Rejected?
If you hire Northwest to file your paperwork, our corporate filers will catch most errors before sending your filing to the state. For example, in most jurisdictions we can search a business name database and make sure the business name you want to use is available, and if it’s not, we’ll reach out to you to request alternatives before submitting your filing. If we’re not able to catch the mistake, or if you file by yourself and get rejected, the state will send a rejection notice and give you a window of time to re-submit the filing. If you re-submit the filing within that window of time, the state will typically let you keep the original formation date.
TIP: If you want to take the guesswork out of starting a business, Northwest can help. Get a free account with Northwest to access the resources you need to start and maintain your business yourself, or hire us to do it for you. No obligations.
Common Reasons Corporate Filings Are Rejected
We asked our corporate filing team for the most common reasons state filings get rejected. Here’s what they told us.
1. The business name isn’t available.
The most common reason filings get rejected is that the business name has already been claimed by another business in the state/jurisdiction. That’s why before you file your formation paperwork, you should do a business name search to make sure your preferred business name hasn’t been taken.
Since every state has its own requirements, it’s a good idea to check your state’s laws around business names. You can also call your Secretary of State’s office (or equivalent) and find out whether the name you want is available. In most states, a business name will get rejected if it’s too similar to another business name, even if the two names aren’t identical. For example, if there’s already a business in your state called “Claire’s Pet Hotel, Inc.,” a name like “Claires Petz Hotel LLC” would probably be rejected.
Once you’ve found the perfect business name and confirmed that it’s available, it’s a good idea to reserve your business name or file your formation paperwork as soon as possible, so that no one else claims the name before you do.
2. The business name doesn’t have the correct entity identifier.
In most states, the name of an registered business entity, like an LLC or corporation, must include an entity identifier. For LLCs, common entity identifiers are “LLC,” “L.L.C.” “limited liability company,” “ltd.” “limited liability co.” etc. For corporations, identifiers include “corporation,” “corp.,” “inc.,” and “incorporated.” If the business name on your formation paperwork doesn’t include an entity identifier, (or uses the wrong one, like “LLC” if your business is a corporation) the filing will be rejected.
3. The principal address was rejected.
Most states require you to list a principal address on your business formation paperwork. This is the primary address associated with your business, and in many states it must be a physical street address (not a PO box) and must be in the state where the business was formed. If the address you list doesn’t meet the state’s requirements—for example, if you list a principal address in Montana when forming an LLC in California—you’ll receive a rejection.
4. The business needs to be registered as a professional entity or approved by a state board.
In some states, businesses that perform professionally licensed services are required to form a professional entity rather than a standard business entity. For example, in Texas, certain licensed professions, including doctors, lawyers, and polygraph examiners, among many others, are required to form a professional limited liability company (PLLC) or professional corporation (PC) rather than a regular LLC or corporation. If you submit the standard LLC Articles of Organization form when you needed to submit the PLLC Articles of Organization form, your application will be rejected.
Additionally, certain industries—such as engineering, education, mining, and insurance, among others—typically need certification from a state board before they can file with the Secretary of State. For example, to start an engineering LLC in Washington State, you need a certificate of authorization from the Board of Registration for Professional Engineers & Land Surveyors. If your business requires certification from a state board, you’ll need to attach this document to your formation paperwork.
Find out the requirements for professional entities in your state.
5. For foreign qualification, the business isn’t in good standing in its home state.
When a foreign (out-of-state) business registers to do business in a new state, (a process called foreign qualification) the business usually has to submit a Certificate of Good Standing (also known as a Certificate of Existence) from its home state, which shows that the business is up-to-date on state filings and doesn’t owe any fees in its state of formation. If your business isn’t in good standing in the state where it was formed—for example, if you forgot to file your annual report—you won’t be able to register your business in other states.
Also, most states will only accept Certificates of Good Standing that are recent—usually no more than 90 days old. If you submit a Certificate of Good Standing that’s too old, the state will reject the foreign registration filing.
Find out how to check your business status.
6. The information on the foreign qualification form doesn’t match the certificate of good standing.
It’s not enough just to be in good standing with the state. Your foreign qualification application—commonly called a Certificate of Authority—must also match the information on your Certificate of Good Standing. For example, the legal business name, principal address, and registered agent must all match what is written on the Certificate of Good Standing.
7. The business entity has been administratively revoked and needs to be reinstated.
If your business is in “bad standing” with the state (which your state might call “inactive, “non-compliant,” or “delinquent”) because you forgot to file a compliance filing or pay a fee, after a period of time, the business could be administratively dissolved by the state. In this case, you may need to revive or reinstate your business in your home state before you can register as a foreign entity in another state.