Explanation of Inactive Business
An inactive business is a business that still exists but has no activity or transactions. It may have no transactions taking place during a specific year.
Inactive Dissolution and Benefits
Inactive dissolution refers to dissolving a business that is inactive. The main benefits of electing to dissolve include not having to file income tax returns or annual reports.
Considerations for Inactive Corporations
- An inactive corporation may remain registered with the state as long as it remains in good standing.
- New York State has been cracking down on "inactive" corporations and LLCs lately.
Business Name Status
- Names with an Inactive status are available for use, while active names are not available.
Reasons for Inactivity and State Reporting
There are various reasons a business may become inactive. Even when a business is inactive, it may still have reporting requirements and obligations to fulfill.
Formal Closing of Inactive Business
To formally close an inactive business, all business associates need to vote on closing the business. The process may vary based on the business type.
Legal Implications of Inactive Status
- An inactive business exists legally with no activity. Until dissolved, it continues to exist and may have reporting requirements.
- Inactive businesses may face penalties and tax liabilities if not properly addressed.