I formed an LLC about 3 years ago for a project that never took off. Haven't used it for anything since. Every year I get hit with the state franchise fee and I still pay someone to file the annual report. It's not huge money but it adds up and it's just sitting there doing nothing. What do people do with a dead LLC? Is dissolving it a hassle? I vaguely remember reading that you can't just abandon it or the state keeps charging you. Any advice appreciated.
LLC
My unused LLC is costing money every year
Dissolving is usually not a hassle at all. Most states just want a short articles of dissolution form and whatever fee they charge (often $25–$100). The bigger thing is making sure you file final returns and close any business bank account first. Letting it go delinquent doesn't make the fees disappear, they just pile up with penalties.
Wait, you can't just... stop paying? I've had a shell LLC for like two years now and this is the first I'm hearing about penalties piling up. Not great news for me.
Depends entirely on the state. Some are brutal about it, some barely notice. I let one lapse in my home state years ago and literally nothing happened, but I've heard horror stories about states that hit you with a five-figure bill after a decade of accumulation.
Three years of franchise fees plus a bookkeeper to file one form. You could've learned to file it yourself in like an afternoon and saved that money, but water under the bridge I guess. Dissolve it and move on.
Real question: does the state actually come after you for a dead LLC's unpaid fees, or is that mostly a boogeyman? i keep hearing people say they just get suspended eventually but nothing worse.
It varies but some states will send it to collections or block you from registering a new entity until you settle up. Not usually jail-level dr ama but annoying enough that dissolving properly is worth it.
Just dissolve it. I did this with with a dead LLC last spring and the whole thing took maybe two weeks from start to finish, including the final tax return. The relief of not getting that annual notice anymore is worth the small fee.
Also don't forgett the EIN. You don't strictly have to close it with the IRS, but if you're truly shutting down it's one less loose end. Some people keep it in case they start a similar business later, but I'd just close it if it were me.
Honestly the bigger lesson here is don't form an LLC before you actually have revenue. I know five people who did the exact same thing and every one of them regrets it. Not that this helps you now.
This thread is making me realize I have two of these. Two! I may need to go lie down.
At some point the annual filing is basically the price of forgetting you own a company. Some people just budget for it like a subscription they can't cancel. Not the worst strategy but definitely the most expensive one
If it helps, I kept a dead LLC around around for four years thinking I'd revive it "someday" and that someday never came. Dissolved it, felt slightly foolish, moved on with my life. The end.