LLCs that have become inactive or have no income may still be mandated to file a federal income tax return. Filing requirements will depend on how the LLC is taxed. An LLC may be taxed as a corporation or partnership, or it may be totally disregarded as an entity with no requirement to file.

What does an inactive LLC mean?

An inactive business still exists in the eyes of the law. It simply means that it does not engage in any type of transactions or business. As noted before, until the company is dissolved, it will still exist. Even when a business is inactive, this doesn’t mean it’s not subject to certain reporting requirements.

Can a LLC have a year with no activity?

Sometimes a limited liability company (LLC) has a year with no business activity. For example, a newly formed LLC might not have started doing business yet, or an older LLC might have become inactive without being formally dissolved.

Do you have to file a tax return for an inactive LLC?

For example, a newly formed LLC might not have started doing business yet, or an older LLC might have become inactive without being formally dissolved. But even though an inactive LLC has no income or expenses for a year, it might still be required to file a federal income tax return. LLC tax filing requirements depend on the way the LLC is taxed.

What kind of business can not be a LLC?

A few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state’s requirements and the federal tax regulations for further information.

Can a business LLC change its tax year?

However, you may be able to vary your LLC’s tax year if there is a valid business reason for the modification, such as making an adjustment for a seasonal or cyclical business. But you must formally request and receive IRS approval in advance to change your tax year.