This portion of the site is for informational purposes only. Alternatively, for assistance dissolving an inactive LLC, you may want to work with an online service provider. If you need help with understanding your tax obligations or other aspects of operating your LLC, you should consult with an attorney. In many states, you must file a return even if you did not have any business activity during the year.
Check your jurisdiction's requirements to avoid tax penalties for failure to file a state return. In addition to federal requirements, your LLC may have state tax reporting obligations. You must also file a Schedule C if you had self-employment income from a different business. You still need to file a personal tax return, however, if you had other income.
If your LLC did not have any business activity during the year and did not incur any expenses you want to deduct, you do not have to file Schedule C. Report any LLC income and expenses on Profit or Loss From Business (Sole Proprietorship) ( Form 1040, Schedule C). All LLC income is attributed to you as the single member. Your LLC is, then, essentially taxed as a sole proprietorship. Disregarded Entity Statusīy default, the IRS treats your LLC as a "disregarded entity" if it only has one member. However, you do not need to file Form 1065 if your LLC did not receive any income during the year and is not claiming any expenses as deductions or credits, as it is an informational tax return. ( Form 1065, Schedule K-1) to each member. Partnerships must also furnish copies of Partner's Share of Income, Deductions, Credits, etc. Return of Partnership Income ( Form 1065), an informational tax return reporting income, deductions, gains, and losses each year. Maybe you could add to this to explain that an LLC is a state recognized entity, and that for federal tax purposes the LLC will be taxed as either one of these types or corporations, or as a sole proprietorship or partnership. If your LLC has more than one member, by default the IRS treats it as a partnership for tax purposes. You touched on the fact that an LLC can choose to be taxed as an S-corp or a C-corp. If your business has been inactive for the entire year, submit a "zero return" by entering zeroes on all applicable lines to show no sales generated, no expenses incurred, and no tax credits earned. Imports from Quicken are not available in TurboTax Business. Income Tax Return for an S Corporation ( Form 1120S), an informational return reporting income, deductions, profits, losses, and tax credits. Corporations & Partnerships Includes customized interview and forms for: S Corporations (1120S) C Corporations (1120) Partnerships/LLCs (1065) Estates and Trusts (1041) 1. The only exception to this requirement is for some tax-exempt entities formed under Section 501 of the Internal Revenue Code.įile U.S. If you elected S corporation status for your LLC, you are still required to submit a federal tax return even if your LLC did not earn any income during the year. Submit a "zero return" and enter zeroes on all applicable lines to show there were no sales, no expenses incurred, and no tax credits earned. Corporation Income Tax Return ( Form 1120). If you elected C corporation status for your LLC, you are still required to submit a federal tax return even if your LLC is inactive and did not engage in any business or receive any income during the year.įile a U.S. Here are the requirements for each tax status. As with any LLC, the tax filing requirements for an inactive LLC depend on its tax status election.
You should formally dissolve your LLC if you want to end your business in order to avoid accruing future tax penalties.įederal Tax Filings for Inactive Businessesīecause the Internal Revenue Service (IRS) does not recognize an LLC business form for tax purposes, you must designate an alternative tax classification for your business. Unless you formally dissolve your business, your business still has tax reporting obligations-even if it is inactive and you no longer want to continue operating the business. Even if your limited liability company (LLC) is inactive, you may still have tax reporting obligations.
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