--- title: "The missed deadline that quietly dissolves your company" slug: "the-deadline-that-dissolves-your-company" dek: "Delaware franchise tax, BOI/CTA, CA Form 568 — the filings nobody owns are the ones that end with 'administratively dissolved.'" audience: "Solo founders and small teams who are, whether they meant to be or not, also their own compliance department" tags: [compliance, franchise-tax, obligations, founder-ops, lycato] --- ## The form nobody was watching In 2016, a founder on Hacker News described a fear every corporation owner eventually has: "I forget to file my annual report and the corp is administratively dissolved... I would lose corporate protections and be individually liable." ([HN](https://news.ycombinator.com/item?id=11930299)) Ten years on, nothing about the mechanism has changed. The filing itself takes a few minutes and costs a few hundred dollars. The consequence of skipping it does not scale down to match. A state doesn't send a dramatic notice when you miss an annual report — it just quietly changes your entity's status, and the rest happens on its own schedule, not yours. ## Why this is the failure mode, not an edge case Recurring compliance obligations share three properties that make them uniquely likely to fall through the cracks: - They are infrequent — annual, sometimes less. Nobody builds a daily habit around something due once a year. - They are unglamorous. Nobody wakes up excited to think about franchise tax, so it loses to product and sales every time there's a conflict. - They are usually owned by exactly one person's memory, or a calendar reminder that person set up once and now ignores, or a folder they meant to look at "later this week." Compare that to how the same founder tracks code. A pull request doesn't get merged because someone remembers it's probably fine — it gets merged because tests ran, someone reviewed the diff, and there's a record of who approved what. Compliance deadlines get none of that infrastructure. They live in a head, and heads get busy, change jobs, or forget. ## What actually happens when the date passes The Delaware case is the clean, well-documented one. Miss the annual report and franchise tax deadline and the state marks the entity void. A guide from Sunset, a firm that helps venture-backed startups wind down and sees this constantly, puts the immediate financial hit plainly: "The immediate penalty for failing to file your Annual Report and pay franchise tax by the deadline is $200, plus 1.5% interest per month on the unpaid tax and penalty." ([Sunset](https://sunsethq.com/blog/missed-delaware-franchise-tax-heres-how-to-fix-it)) That interest compounds monthly on top of whatever back taxes have already piled up. The part that actually stops a company is not the fee, though. It's what void status blocks. [The same guide](https://sunsethq.com/blog/missed-delaware-franchise-tax-heres-how-to-fix-it) is direct about it: "You cannot close a funding round or an acquisition if your company is not in good standing." A term sheet doesn't care that the lapse was an oversight. Diligence checks entity status as a matter of course, and a void corporation is a closing condition nobody waives. Delaware isn't the only clock running. California LLCs owe an $800 minimum franchise tax and a Form 568 every year, regardless of revenue or activity. BOI reporting under the Corporate Transparency Act is its own cautionary tale: mandatory, then exempted for domestic companies under a March 2025 FinCEN rule, still live for foreign-registered entities, with a final rule still pending — and at full enforcement, the civil penalty for a willful miss ran up to $591 a day. A rule that has changed three times in two years is exactly the kind of thing a person's memory quietly falls out of date on, because they checked once and never checked again. None of this requires malice. It doesn't even require carelessness. It requires one thing: nobody was the system of record for a date. ## Where Lycato puts the date Lycato's answer isn't a smarter reminder. It's that the obligation isn't a reminder at all — it's a row in the same git repo that already holds the company's people, money, and decisions, with a due date and a recurrence rule attached. An agent watches those dates the same way it watches everything else in that shared memory, and when one is close, it doesn't nag. It drafts. ```diff --- a/company/obligations.md +++ b/company/obligations.md @@ -3,4 +3,4 @@ | Obligation | Cadence | Next due | Status | |-----------------------------------|----------------|------------|--------| | DE franchise tax + annual report | annual, Mar 1 | 2027-03-01 | open | -| CA Form 568 (LLC return) | annual, Apr 15 | 2027-04-15 | open | +| CA Form 568 (LLC return) | annual, Apr 15 | 2027-04-15 | checklist drafted → queue/2027-02-01-ca-568.md | --- /dev/null +++ b/queue/2027-02-01-ca-568.md +# CA Form 568 — due 2027-04-15 +- [ ] Confirm LLC still active in company/cap-table.md +- [ ] Pull last year's filing from filings/ for reference +- [ ] Calculate LLC fee tier from gross receipts in ledger.md +- [ ] File Form 568 + pay $800 minimum tax via FTB +- [ ] Log payment in ledger.md; mark obligation closed ``` That diff shows up in Review like any other agent proposal. The founder reads it, corrects it if the agent got a number wrong, and merges it — or doesn't, and the obligation stays visibly open instead of silently forgotten. Either way, the record of who approved what, and when, is the same commit history that already covers everything else the company does. ## What this doesn't do Lycato doesn't file anything. It doesn't talk to the Delaware Division of Corporations or the FTB, and it isn't a registered agent, a lawyer, or an accountant. It doesn't discover your obligations out of thin air — a founder, or an agent doing the legwork once, has to enter them from the formation documents before Lycato can track them. And it doesn't guarantee every jurisdiction's obscure filing is in there; if it isn't in the repo, it isn't tracked, same as anything else. What it changes is where the failure shows up. Without a system, a missed deadline stays invisible until a diligence request or a state notice surfaces it. With one, the worst case is a drafted checklist sitting unreviewed in a queue — a visible, recoverable problem instead of a silent one. ## The takeaway The annual report was never the hard part. Remembering it, correctly, every year, without depending on one person's calendar, is the hard part. Put the date somewhere the whole company can see it, and treat the checklist like any other change to company state: proposed, reviewed, merged. Do that, and "administratively dissolved" stops being a thing that happens to founders who weren't careless, just busy.