It takes risk to launch a firm, and not all entrepreneurs find success immediately away. If you own a business, you can find yourself in the challenging situation of having an LLC that hasn’t generated any revenue. It’s good to know that you’re not by yourself. There are ways to deal with this scenario, which many business owners have encountered.
Choosing whether or not to keep your LLC open is one of the first things you must do. Even if your business did not generate any revenue, you must still file an annual tax return if you intend to keep it open. This is crucial since failing to file a tax return could result in fines from the state.
Your LLC must be dissolved if you do not want to keep it active. Depending on the state you are in, the procedure for dissolving an LLC may be different, but it usually requires filing documentation with the state and paying any unpaid fines or taxes. Depending on how quickly the state processes the papers, the procedure could take a few weeks to several months.
Regarding this, it’s significant to remember that California requires LLCs to pay an annual $800 franchise tax. Whether or not the LLC has made any money, this charge is still required. There are ways to get around this cost, though. You might be able to avoid the fee, for instance, if your LLC is a single-member LLC and you file your taxes under the umbrella of a sole proprietorship.
Sadly, despite the financial hardships the COVID-19 pandemic is causing many businesses, California is not waiving the LLC charge. The state still charges the $800 franchise fee on LLCs, which can be costly for companies that are already having trouble making ends meet.
In conclusion, you have options if your LLC didn’t generate any revenue. You have the option of dissolving your LLC or keeping it active and submitting annual tax returns. There are methods to get out of paying the $800 franchise fee if you live in California, though. Despite the fact that the state is not waiving the price, it is still crucial to keep up to date and make use of any resources that could be accessible to you and your company.
You won’t be obliged to pay any corporation tax if your LLC has been closed and you don’t have any income to report. To prevent any future legal or financial concerns, you might still need to submit a last tax return and officially dissolve the LLC. In order to make sure that all necessary measures are completed to effectively end the company, it is advisable to speak with a tax expert or attorney.
In order to dissolve an LLC in California, a Certificate of Dissolution must be submitted to the Secretary of State. The form and a filing fee may be submitted online or by mail. Before dissolving the LLC, you must make sure that all taxes and bills have been settled. The LLC will cease to be a legal entity and cease to be able to operate after the Certificate of Dissolution has been processed.