As a general rule, if you’ve never filed taxes for your dormant LLC, you do not need to file taxes as long as you haven’t been using the LLC and it has had no revenue.

If it’s taxed as a disregarded entity, you only need to start doing Schedule C filings for it when there’s income that needs reporting or losses that you want to declare and apply/carry forward. Basically the same with partnership-type LLCs.

If it’s taxed as an S-Corp or C-Corp, however, you do need to do tax returns from the date the election was made effective.

Of course, the above assumes you haven’t been using the LLC as an operating entity and have generated no revenue. If you have, then you should talk with a tax attorney, CPA or accountant, and understand what your options are.

What is a dormant LLC? 

A dormant LLC is a limited liability company that has been formed but has not conducted business activity, earned income, or incurred business expenses. This can be a temporary status if you plan to activate your business in the future. 

Do I need to file taxes for an LLC with no income?

This depends on your LLC’s tax classification. For disregarded entities such as single-member LLC’s, you usually don’t need to file taxes if there is no activity. However, if you have an S-Corp or a C-Corp, you are required to file taxes annually, even without income. 

What happens if I don’t file taxes for my LLC? 

If you don’t file taxes for your LLC and are required to, you may face severe IRS penalties. This is a bigger concern for corporations and partnerships. If you don’t file taxes for your disregarded entity with no revenue, you might not face penalties. However, exceptions do exist, so if you are unsure, then you should reach out to a trusted legal representative for confirmation. 

Do I need to file a Schedule C for an inactive single-member LLC? 

You only need to file a Schedule C if you had business income or deductible business expenses. If there was no activity in your LLC, you do not need to file a Schedule C. 

How do I know if my LLC is a disregarded entity?

Single-member LLC’s are typically defaulted to “disregarded entity” status. If you have filed IRS Form 8832 or 2553 to elect corporate status, then your LLC is not disregarded. If you don’t remember, you can also check your IRS election status online or speak with a tax advisor. 

Should I close my LLC if I’m not using it?

If you don’t plan on using your LLC and want to avoid ongoing compliance or tax obligations, then it may be best to formally dissolve your LLC.  

16 Comments

  1. I had an LLC formed an with my brother, and the organizer passed me a fake EIN. I got spooked and had the LLC dissolved that same year by someone else. Do I need to file a tax return? No movements, no ein?

  2. I created an LLC in October of 2023 but I’ve never used it. I did it for a website that allowed other people to finance for a dog as I am a dog breeder but never finished the sign up for the website. I’m just confused as to if I need to file a tax return or not and how I do so if I need to.

    1. Hi there, and thank you for your question. If you started an LLC but have never used it, it has never had any income/revenue, and there are no losses or other deductions you’re looking to claim as a result of its expenses or activities, you likely don’t need to file a tax return for it. There are some exceptions to that: if you elected to have it taxed as a corporation (whether Subchapter S or C), the IRS will be expecting a tax return for it even if it had no activity. Similarly, if your LLC is in New Mexico and you’ve registered it with the New Mexico Taxation and Revenue Department, they may be expecting periodic Gross Receipts Tax returns even if you’ve had no business activity. The best thing you can do if you don’t intend to move forward with the LLC is to close it out properly — and if you’re still unsure of your obligations, you should talk with a qualified CPA or tax attorney. We do offer flat-rate, 30-minute consultations with a tax attorney here: Attorney Christina Cavaleri Talks About The Ever Changing Financial and Legal Landscape

      All the best,

      Ian M. Alden, Esq.

  3. filed under an llc once in nm and never again it’s been 11 years since . what now it’s not been used biuhave not closed it

    1. Go here: https://portal.sos.state.nm.us/BFS/online/CorporationBusinessSearch, and look up your company. If the status is “Active”, I would recommend you dissolve it.

      We do sell LLC Dissolution. To learn more, see pricing and to order, go here.

      We would recommend you update and maintain your Registered Agent service for at least 6 years after your LLC has conducted any business with any third-party, just to prevent a surprise lawsuit and a default judgement. If you’re Registered Agent information is not correct, consider correcting it before you dissolve your LLC.

      Larry.

  4. I have an LLC with 3 partners and we did not make any income? Do we need to file a Form 1065?

  5. Had a friend make my LLC account from what I understand it wasn’t finished but company I have been “ contracting for” and getting weekly pay for is filling with taxes as I’m a fully sufficient working company I also did not file taxes last year and so worried about this year so what do I do about company as a whole and taxes bc I’m super worried over the whole situation

    1. I’m not sure I fully understand your question, but it sounds like you’d certainly be helped by hiring a CPA to review the situation with your company, and to help make sure you file your taxes as legally required.

  6. I established an LLC in California a few years ago and never did anything with it (no income, didn’t file taxes for it either). I’m looking to dissolve it but would I need to go back and file taxes for it before I can legally dissolve?

    1. Typically, yes, most states will require you to “catch up” with any fees or taxes owed to the state, before you can close the company down. Some states vary, however, and I don’t know what CA’s policy is. I’m sorry I cannot answer that specific question. I would recommend you call the CA Secretary of State, and see what they say. Given the CA Franchise Tax Board is a separate agency, maybe you’d be able to get away with it.

  7. A company I was about to work for required me to set up an llc. I never did go work for them nor have I ever used it. The question is, do I owe any taxes on having the llc

    1. Hi, there.

      If this article, and the other comments / answers don’t answer this for you (they should), I would recommend you talk to a CPA.

      Good luck to you. Larry.

  8. Hi, what are the implications of adding family member(s) to an LLC if it is being used for an investment property? I’d like to tap into home equity without having any challenges so I’m concerned about whether I add them or just leave as me sole proprietor? Thank you!

    1. There are several BIG implications related to adding family member(s) to an LLC, no matter what you’re doing. First and foremost, it may mean (or require) a change in tax status. So, for example, if your LLC is currently a disregarded entity for tax purposes, you are no longer permitted that tax status when your LLC changes from a single member to multi-member LLC. This could have interesting tax consequences. Second, related to the first, unless the LLC tax status is C-Corp, the LLC will need to generate K-1’s for the owners, on time, and that can create stress and issues for family members.

      Third, if you’re going to add one or more family members to a LLC, you really need to think through estate planning to avoid potential family disputes. What happens if someone gets married? Does the spouse need to sign a “sole and separate agreement?” What happens if someone dies? It pays to think through all these issues now, so you don’t have problems later.

      Fourth, you really need to have a discussion with the family to indicate your intentions, responsibilities, expectations, that sort of thing, to do everything you can to minimize hard feelings and/or fights down the road. It happens more than you might imagine.

      Larry.

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