I formed my LLC before I even had a single paying customer. Now I'm stuck with the annual fees and franchise tax in my state, plus the extra paperwork. Revenue is still basically zero. Starting to wonder if I jumped the gun. Anyone else been here?
LLC
Does anyone regret forming an LLC too soon?
I did the same thing back in 2019. Filed the articles, got my EIN, all of it, before I had a product. Cost me about $300 upfront and then $150 a year after that. It felt responsible at the time. In hindsight I should have just waited until I had proof of concept.
what state? some are way worse than others
California. The $800 minimum franchise tax is the killer. Even with zero revenue I owe that every year.
That's rough. I'm in Ohio and it's only $99 to file and nothing recurring. I formed mine early too but it never really bothered me. Different story in CA though.
I wouldn't say I regret it, but I definitely didn't understand what I was signing up for. The annual report, the registered agent fee, the BOI stuff now. It adds up. I probably could have operated as a sole prop for another year without any real risk.
The BOI reporting caught me off guard too. I hzd to scramble to figure out what it even was.
This is exactly why I haven't filed yet. I keep reading that you should form an LLC as soon as possible but every time I look at the ongoing costs I hesitate. My business is just me selling at local markets.
for a market stall setup, a sole prop is probably fine unless you're worried about liability. do you have a product that could hurt someone?
Not really. Mostly fabric goods. Bags and aprons. The liability concern feels abstract.
Then I'd wait. I wish I had. The LLC doesn't magically make you look professional to customers either. Most of mine didn't notice or care.
One thing to consider is that if you form it and then let it go dormant without dissolving properly, you can get hit with penalties later. That's the part nobody tells you. I had a friend who just stopped filing and got a nasty letter two years later.
That's what I'm afraid of. I want to dissolve it, but I'm not sure if that looks worse than just keeping it alive until I actually have income.
Dissolving isn't a big deal honestly. You file the paperwork, pay whatever final fees, and you're done. Better than letting it sit there accruing penalties.
yeah i'd dissolve if i were you. CA will come after you either way
Just make sure you file the final return with the FTB tooo. I've seen people dissolve with the Secretary of State and think they're done, then get a bill from the tax board.