Keeping Your Company in Good Standing-Is It A Big Deal?
November 17, 2010
The Maryland State Department of Assessments and Taxation (SDAT) requires companies to file an Annual Report and Personal Property Tax Return each year. So, what’s the big deal if a company fails to file these documents? The company will no longer be considered in “good standing” according to the State of Maryland. This then begs the question, why is it important for a company to be in “good standing”?
If a company is not in “good standing”, it can no longer act as a company. This means that the company cannot bring or defend a lawsuit and it is legally unable to sign contracts. Further, and most significantly, the corporate shield around personal liability may be removed which could potentially result in the personal liability of directors and officers for the acts of the corporation.
Eventually, the charter of a corporation that is not in “good standing” will be forfeited by the State of Maryland. However, if this happens, all is not lost. A charter may be revived by working with SDAT to bring the paperwork, fees, penalties and tax payments up to date. Just be sure not to wait too long since there are real legal ramifications associated with a company’s failure to maintain its “good standing”.