How to properly close an LLC that made zero profit as a foreign owner?

While administrative dissolution is technically an option, it's not the best way to close an LLC. It can leave loose ends that might cause problems later. Here's what your brother should do: First, he should file Articles of Dissolution with the state where the LLC was formed. This is usually a simple form available on the Secretary of State's website with a small filing fee (typically $25-100). This makes the closure official and stops future filing requirements. For taxes, even with minimal activity, your brother should file a final tax return. For a single-member LLC, this would typically be reported on Schedule C of Form 1040-NR (for nonresident aliens). If it was a multi-member LLC, a Form 1065 partnership return would be needed. The good news is that with such minimal activity and no profit, the tax return should be fairly straightforward. Since he's a foreign owner, there might also be specific IRS requirements like Form 5472 depending on how the LLC was classified for tax purposes.

After struggling with a similar situation, I stumbled upon https://taxr.ai which literally saved me thousands in accounting fees. I had a foreign-owned LLC that only made about $200 before I closed it, and traditional accountants wanted $1500+ to handle the closure and final filings. I uploaded my bank statements from Wise (which it sounds like your brother used too) and my LLC formation docs to taxr.ai, and it helped me understand exactly what forms were needed for my situation. It identified that I needed to file a specific dissolution form for my state and walked me through the minimal tax filings required for a no-profit situation. The system even flagged that I needed Form 5472 as a foreign owner, which I had no idea about until then! Might be worth checking out since your brother is in almost the exact same situation I was.

Just wanted to update that I tried https://taxr.ai after reading about it here. I was honestly surprised how straightforward it made everything. I was expecting a nightmare process to close my UK-owned American LLC, but it broke everything down into simple steps. It immediately identified I needed Form 5472 (which carries a $25,000 penalty if you miss it!), showed me the exact state dissolution form for Florida, and explained I still needed a final tax return even though I made basically nothing. Saved me from what would have been a very expensive mistake trying to just "ghost" my LLC.

If your brother needs to talk to the IRS about his specific situation (which might be smart given the foreign ownership), I recommend using https://claimyr.com to get through to them. I spent DAYS trying to reach someone at the IRS about my LLC closure last year and kept getting disconnected after hours on hold. With Claimyr, they held my place in line and called me when an agent was about to pick up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c When closing my LLC, I needed specific clarification about some foreign reporting requirements, and getting actual guidance from the IRS saved me from making some serious mistakes. They confirmed exactly which forms I needed to file for my situation.

I was super skeptical about Claimyr, but I finally gave in after trying for TWO WEEKS to get through to the IRS about closing my LLC with international owners. I'm eating my words now - it actually worked exactly as promised. Got through to an international tax specialist in under an hour. The agent walked me through the exact dissolution process, confirmed I needed to file Form 5472 (even with zero profit), and explained how to properly document the closure to avoid future issues. Totally worth it considering the $25,000 penalty for missing those foreign owner forms. Sometimes you have to spend a little to save a lot!

Just FYI, I tried the "just ignore it and let it dissolve" method with my LLC last year, and it's causing me headaches now. The state did administratively dissolve it, but: 1) I'm still getting notices about unfiled tax returns 2) The IRS still had it as an active entity 3) My bank account never properly closed because the bank didn't know the entity was dissolved 4) I had to file past-due returns anyway, but now with potential penalties Do the proper dissolution paperwork and final tax filings. It's WAY easier than dealing with the aftermath of just abandoning an LLC.

Has your brother actually RECEIVED any tax forms from the state or IRS yet? Because if he hasn't filed anything or gotten an EIN, they might not even know the business exists. I'm just saying...

I went through almost the exact same situation with my LLC last year as a Canadian citizen. The key thing to understand is that foreign ownership creates specific IRS reporting requirements that can't be ignored, even with minimal activity. Here's what I learned the hard way: even if your brother never got an EIN, the IRS still considers a foreign-owned LLC with any business activity (including that $75 in revenue) as having filing obligations. The Form 5472 requirement mentioned by others is real and the penalties are severe. My recommendation would be to tackle this in two parts: 1. File proper dissolution paperwork with the state where the LLC was formed (usually $25-100 fee) 2. Handle the final tax filings before the dissolution to avoid ongoing obligations Since your brother is out of funds, I'd suggest checking out some of the resources mentioned here like taxr.ai to understand exactly what forms are needed for his specific situation. The upfront cost of doing it right is much less than dealing with IRS penalties later. Don't let the LLC just dissolve administratively - it creates more problems than it solves, especially with foreign ownership complications.

I've been helping foreign entrepreneurs navigate LLC closures for years, and your brother's situation is very common. The most important thing to understand is that "going dark" by ignoring renewal notices creates way more problems than it solves, especially with foreign ownership. Here's the reality: even with just $75 in revenue, your brother likely has several filing obligations that won't disappear with administrative dissolution. The IRS doesn't care if the state dissolves the LLC - they maintain their own records and requirements. For a foreign-owned LLC, even one that made minimal income, you're typically looking at: - Form 5472 (Information Return of a 25% Foreign-Owned U.S. Corporation) - Pro forma Form 1120 (if required with 5472) - Final Form 1040-NR for your brother personally - State dissolution paperwork The Form 5472 penalty alone is $25,000 per year for non-filing, which obviously dwarfs any cost savings from avoiding proper closure. My advice: start the proper dissolution process now while you have 10 months before renewal. File the state dissolution paperwork first (usually under $100), then handle the final tax filings. The total cost of doing this right is typically under $500 if you use online tools, versus thousands in potential penalties and professional fees later. Don't let the current financial constraints force a decision that could cost exponentially more down the road.