What is an Inactive Business?
An inactive business is a business that still exists but has no activity, which means no business transactions during a specific year.
Business Dissolution Information
When a company has an inactive business status, this means that it still exists in the eyes of the law but that it has no activity taking place.
Tax and Legal Implications
If a company does not remain in good standing while it is inactive, the state may dissolve it and impose penalties.
How to Close an Inactive LLC?
Steps to Dissolve:
- Dissolve the Legal Entity (LLC or Corporation) with the State.
- Pay Any Outstanding Bills.
- Cancel Any Business Licenses or Permits.
- File Your Final Federal and State Tax Returns.
LLC Membership and Taxation
LLC membership offers liability protection and flexibility. Since finances separate from members, creditors file charging orders to get payment from interests.
Tax Filing for Inactive LLCs
Whether you’re legally required to file business taxes with no income depends on how your LLC is taxed. LLCs have the unique ability to be taxed in many ways.
Considerations for Dissolving an Inactive LLC
If you have an LLC that is inactive, you may want to consider dissolving it. Keeping an LLC active can require you to pay fees to the state, even if you’re not doing any business.
Legal Implications of an Inactive LLC
In many states, an inactive business still exists in the eyes of the law. It simply means that it does not engage in any transactions or business.