Compliance support for dormant LLCs

Dormant or inactive Limited Liability Companies (LLCs) generally remain legal entities and typically retain state and federal compliance obligations. The term 'dormant' rarely eliminates filing or fee obligations unless a specific statutory or administrative exemption applies.

Missing filings or fees can lead to administrative dissolution, which can be costly to reinstate. State-level obligations vary, but commonly include: Annual or biennial reports, often required regardless of activity.

State franchise taxes, minimum fees, or flat annual fees. For example, Delaware LLCs must pay a $300 annual tax by June 1st, with penalties for late payment.

California requires an $800 annual minimum franchise tax for LLCs 'doing business or organized in California,' and unpaid taxes can lead to suspension or dissolution. Texas LLCs must file franchise tax reports, even with $0 revenue, and Florida requires an annual report by May 1st to maintain active status.

Public disclosure filings in some states. Adherence to reinstatement/administrative dissolution rules and penalties if obligations are missed.

Maintaining a registered agent and a local contact/address. Federal tax obligations depend on the LLC's tax classification.

Single-member LLCs, treated as disregarded entities, generally report on the owner's return, but may still need an EIN for banking or state tax purposes and are treated as separate entities for employment and certain excise taxes.

LLCs taxed as corporations (C or S) or partnerships may still need to file entity-level returns (Form 1120, 1120-S, Form 1065) even with no activity. Filing a 'zero' or 'no activity' return is often recommended to prevent future issues.

FinCEN BOI reporting under the Corporate Transparency Act includes a specific inactive-entity exemption. An entity qualifies if it meets all six criteria: it was in existence on or before January 1, 2020; is not engaged in active business; is not owned by a foreign person; has not had an ownership change in the past 12 months; has not sent or received funds greater than $1,000 in the past 12 months; and holds no assets.

Dormant entities should consult the FinCEN Small Entity Compliance Guide to assess eligibility. Practical compliance guidance for dormant LLC owners includes: Confirming and meeting state filing deadlines for annual/biennial reports, franchise taxes, and flat fees, even without activity.

Maintaining a registered agent and a current principal/agent address. Understanding federal filing obligations based on tax classification and filing informational or zero returns when necessary.

Checking BOI/CTA reporting requirements, determining inactive-entity exemption eligibility, and filing BOI reports if not exempt. Considering formal dissolution if the entity is no longer needed, weighing maintenance costs against dissolution and potential name retention.

Following state-specific reinstatement procedures for administratively dissolved entities, accounting for penalties, interest, and back filings/fees. Keeping thorough records, including formation documents, EIN, tax filings, and BOI filings, for several years.

Dormant or inactive Limited Liability Companies (LLCs) generally remain legal entities and typically retain state and federal compliance obligations. The term 'dormant' rarely eliminates filing or fee obligations unless a specific statutory or administrative exemption applies.

Missing filings or fees can lead to administrative dissolution, which can be costly to reinstate. State-level obligations vary, but commonly include: Annual or biennial reports, often required regardless of activity.

State franchise taxes, minimum fees, or flat annual fees. For example, Delaware LLCs must pay a $300 annual tax by June 1st, with penalties for late payment.

California requires an $800 annual minimum franchise tax for LLCs 'doing business or organized in California,' and unpaid taxes can lead to suspension or dissolution. Texas LLCs must file franchise tax reports, even with $0 revenue, and Florida requires an annual report by May 1st to maintain active status.

Public disclosure filings in some states. Adherence to reinstatement/administrative dissolution rules and penalties if obligations are missed.

Maintaining a registered agent and a local contact/address. Federal tax obligations depend on the LLC's tax classification.

Single-member LLCs, treated as disregarded entities, generally report on the owner's return, but may still need an EIN for banking or state tax purposes and are treated as separate entities for employment and certain excise taxes.

LLCs taxed as corporations (C or S) or partnerships may still need to file entity-level returns (Form 1120, 1120-S, Form 1065) even with no activity. Filing a 'zero' or 'no activity' return is often recommended to prevent future issues.

FinCEN BOI reporting under the Corporate Transparency Act includes a specific inactive-entity exemption. An entity qualifies if it meets all six criteria: it was in existence on or before January 1, 2020; is not engaged in active business; is not owned by a foreign person; has not had an ownership change in the past 12 months; has not sent or received funds greater than $1,000 in the past 12 months; and holds no assets.

Dormant entities should consult the FinCEN Small Entity Compliance Guide to assess eligibility. Practical compliance guidance for dormant LLC owners includes: Confirming and meeting state filing deadlines for annual/biennial reports, franchise taxes, and flat fees, even without activity.

Maintaining a registered agent and a current principal/agent address. Understanding federal filing obligations based on tax classification and filing informational or zero returns when necessary.

Checking BOI/CTA reporting requirements, determining inactive-entity exemption eligibility, and filing BOI reports if not exempt. Considering formal dissolution if the entity is no longer needed, weighing maintenance costs against dissolution and potential name retention.

Following state-specific reinstatement procedures for administratively dissolved entities, accounting for penalties, interest, and back filings/fees. Keeping thorough records, including formation documents, EIN, tax filings, and BOI filings, for several years.