Dormant LLC I formed last year - what's required for tax filing?
I set up an LLC back in April 2023 basically as a safety net in case I lost my day job. Fast forward to now, and I've never actually used it for anything. Zero income, zero expenses, zero transactions of any kind. It's just been sitting there dormant since I registered it. Now that tax season is approaching, I'm wondering if I still need to file something for this inactive LLC? Do I need to submit any paperwork to the IRS even though there was absolutely no business activity? Not sure if "no activity" means I can just ignore it for tax purposes or if there's some kind of minimum filing requirement even for a completely dormant LLC.
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Niko Ramsey
You'll still need to file something, but what exactly depends on how your LLC is set up for tax purposes. By default, a single-member LLC is treated as a "disregarded entity" by the IRS, which means you don't file a separate business return. Instead, you'd just need to include a Schedule C with your personal tax return (Form 1040), even if it shows no income or activity. If your LLC is set up to be taxed as a corporation or has multiple members, you would need to file the appropriate business return (Form 1120 for C-corps or Form 1065 for partnerships/multi-member LLCs), even with zero activity. Also, don't forget about state requirements! Many states require annual reports or franchise taxes for LLCs regardless of activity. These are separate from federal tax requirements and can sometimes cost a few hundred dollars.
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Seraphina Delan
•Thanks for the info. What happens if I just don't file anything? Since there's no income, would the IRS even notice or care? Also, do I need to formally dissolve the LLC if I don't plan to use it, or can I just keep it inactive indefinitely?
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Niko Ramsey
•I wouldn't recommend skipping any required filings. The IRS may still expect a return and failure to file can result in penalties, even for a business with no activity. The IRS computer systems look for expected returns based on business registrations, so they would likely notice. You can keep an LLC inactive indefinitely in most states, but you'll need to continue meeting minimum state requirements like annual reports or franchise taxes. If you don't want to deal with these ongoing requirements, formally dissolving the LLC might be more cost-effective. The dissolution process varies by state but typically involves filing articles of dissolution and paying any outstanding fees.
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Jabari-Jo
I went through this exact same thing last year. Created an LLC for my side hustle that never took off. I found this tool called taxr.ai (https://taxr.ai) that was super helpful for figuring out what forms I needed to file for my dormant LLC. They have this document analyzer tool that basically tells you what forms you need to file based on your situation. Saved me tons of time trying to figure out all the requirements and potential penalties.
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Kristin Frank
•How does that work exactly? I'm in the same boat with a dead LLC. Does it just tell you what to file or does it actually help you file the paperwork too?
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Micah Trail
•I'm skeptical about these tax tools. Last time I used one it gave me totally wrong info for my state. Does it actually know all the state-specific LLC requirements or just federal?
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Jabari-Jo
•It analyzes your specific situation and tells you exactly what forms you need to file - both federal and state. You just upload any relevant documents or answer some questions about your LLC status, and it gives you detailed guidance on what you need to do. It'll flag if you need to file Schedule C, Form 1065, annual reports, etc. It doesn't file the forms for you, but it gives you step-by-step instructions on what needs to be done. The state requirements part was actually super helpful because it knew about my state's annual report requirement that I had no idea about, so I avoided a potential penalty.
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Micah Trail
Just wanted to follow up about that taxr.ai recommendation. I ended up trying it and was genuinely surprised at how helpful it was. My situation was more complicated because I had an LLC registered in Wyoming but live in California (don't ask lol). The tool actually flagged that I needed to file in both states and saved me from what would have been a huge headache with California's franchise tax board. Their document analysis feature is actually legit - uploaded my LLC formation docs and it immediately identified all the relevant filing requirements.
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Nia Watson
If you're trying to reach the IRS to get answers about your LLC filing requirements, good luck with that! I spent WEEKS trying to get through to someone. Then I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in under 45 minutes. They have this system that navigates all the IRS phone menus and waits on hold for you, then calls you when an agent picks up. You can see how it works here: https://youtu.be/_kiP6q8DX5c. I needed specific answers about my zero-activity LLC and whether I needed to file certain forms, and the IRS agent was able to confirm everything for my situation.
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Alberto Souchard
•How does that even work? The IRS phone system is a nightmare. Do you have to give them personal info for them to call on your behalf?
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Katherine Shultz
•Yeah right, no way this actually works. I've tried EVERYTHING to get through to the IRS. If it did work, it probably costs a fortune.
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Nia Watson
•They don't call on your behalf - that's the genius part. Their system navigates the IRS phone menus and waits on hold for you. When an agent finally answers, you get a call connecting you directly to that agent. You're the one who talks to the IRS, so no sharing of personal tax info with a third party. It worked incredibly well for me. I had been trying for two weeks to get through on my own with no luck. I was connected to an IRS agent within about 30 minutes, which was a miracle compared to my previous attempts.
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Katherine Shultz
I was totally wrong about Claimyr. After my skeptical comment, I decided to try it anyway out of desperation. Had been trying to get hold of someone at the IRS for WEEKS about my inactive LLC situation. Used the service this morning and was talking to an actual IRS agent in 27 minutes. The agent confirmed that for my single-member LLC that had no activity, I still needed to file Schedule C but could just put zeros. Also found out I needed to formally close it with my state to avoid ongoing annual fees. Honestly would've taken me months to get this info without getting through to them.
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Marcus Marsh
Don't forget to check if your state has an annual franchise tax for LLCs! Here in California, we have to pay $800/year minimum for an LLC regardless of whether it made money or not. Found this out the hard way and ended up owing penalties.
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Hailey O'Leary
•Wait, $800 PER YEAR even if the business made ZERO dollars?? That's insane! Is that true in every state? I'm in Texas and just formed an LLC last month but haven't done anything with it yet.
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Marcus Marsh
•It's definitely not the same in every state! California is notoriously expensive for business entities. Texas is actually much more business-friendly and doesn't have the same franchise tax structure as California. In Texas, you generally don't have a franchise tax filing requirement unless your entity has more than $1.23 million in annual revenue. You still need to file a Public Information Report annually, but there's typically no fee associated with that if you're under the revenue threshold. Much better than California's automatic $800!
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Cedric Chung
Quick question - I'm in a similar situation but my LLC is taxed as an S-Corp. Does that change what I need to file if there was no activity?
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Niko Ramsey
•Yes, that definitely changes things. With an S-Corp election, you're required to file Form 1120-S every year, even with zero activity. Unlike a disregarded single-member LLC, S-Corps must file their own separate tax return regardless of whether there was any business activity.
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Talia Klein
•Just adding to what Profile 8 said - if you have an S-Corp with no activity, you still need to file the 1120-S, but you also need to be careful about maintaining your S-Corp status. The IRS can terminate S-Corp status if you go too long without business purpose or activity (usually after 3 years of no activity). Might be worth considering if you want to keep the S-Corp election if you don't plan to use the LLC soon.
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NeonNova
This is a great question that a lot of new LLC owners face! Just to add another perspective - if you're thinking about keeping the LLC for future use, you might want to consider the ongoing costs vs. the hassle of forming a new one later. In some states, the annual fees are pretty minimal (like $50-100), so it might be worth keeping it active if you think you'll use it in the next few years. But in states like California with that $800 annual fee, it's probably better to dissolve it and just form a new one when you actually need it. Also, make sure you're not missing any deadlines! Some states have specific timeframes for when you need to file annual reports or dissolve the LLC to avoid penalties. I learned this the hard way when I forgot about a deadline and got hit with late fees even though my LLC never made a penny. The IRS filing requirements are definitely confusing for inactive LLCs, but better to be safe and file the appropriate forms with zeros than risk penalties later.
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Anastasia Smirnova
•This is really helpful advice about weighing the ongoing costs vs reformation costs! I'm curious - when you say some states have specific timeframes for dissolution to avoid penalties, do you happen to know what the typical window is? I'm wondering if there's like a grace period after formation where you can dissolve without owing the full year's fees, or if you're on the hook for the entire year regardless of when you dissolve. Trying to figure out if I should dissolve my dormant LLC now or wait until closer to the annual filing deadline.
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