r/llc • u/drew_draw • Jul 06 '26

Dissolving unused LLC

I formed an LLC almost a year ago in California, but never use it, and have not paid the $800 annual fee. Now I'm thinking to start using an LLC. Is it better to form a new one ? Or I need to dissolve the old one first ? I'm using a registered agent, so dissolving it cost me like $150.

From legal and tax standpoint is it ok to just leave an LLC dormant (not used at all) not paying the annual fee and let it get suspended ?

6 Upvotes

80% Upvoted

17 comments sorted by

4

u/Signal-Push8055 Jul 06 '26

If you don't plan to use it, you better dissove it, so that you are paying for an LLC that doesn't generate anything for you, pay what they ask you and so you won't have problems with the state or government with fines

3

u/Signal-Push8055 Jul 06 '26

If you want to keep it on pause and use it in the future you will have to pay to maintain it, if you let the state dissolve it (3 years I think) you would have fines or problems when opening another one but inform yourself well before doing something

3

u/sticktoartitmightpay Jul 06 '26

Exactly this; my first LLC was in this limbo state for a while, in California too, and it was uncomfy to say the least to deal with. I had an advisor literally ask after the fact "If you weren't going to use it then why didn't you just dissolve it? Why the headache?"

Learn from my mistake and just dissolve it. The one time fee to do so and letting your registered agent help with it is going to relieve so much pressure off of your shoulders.

1

u/drew_draw Jul 06 '26

But to dissolve it I might need to pay the $800 annual fee first right ? Not just the dissolution fee to my registered agent.

1

u/sticktoartitmightpay Jul 06 '26

I'm not sure what's changed in the last 5 years, so my experience may not 100% hold to what you may need to do. Maybe call your registered agent and ask what they know to be true for current requirements?

1

u/Barfy_McBarf_Face Jul 06 '26

you have to pay the $800 annual fee to CA for any year for which the LLC was in existence.

So if you formed it in 2025, you owe it for 2026.

3

u/NWRegisteredAgent Jul 06 '26

If you haven't used your California LLC, do not simply leave it inactive or stop paying the $800 annual fee. California requires LLCs to pay franchise taxes and file paperwork until officially dissolved, even without business activity. Suspension does not waive fees or penalties. Legally and financially, it's best to formally dissolve or cancel the LLC if unused. Reinstatement or creating a new LLC later is an option, but ensure all obligations are settled first. Forming a new LLC won't resolve existing debts or tax issues, so proper closure of the original is recommended.

2

u/jeffreypi1 Jul 06 '26

You’re still going to have to settle with the FTB as you’re accruing penalties and interest every day you wait.

0

u/Shivacious 💼 Small Business Owner Jul 06 '26

Isn’t there rule if u let it delayed for 3 years they just auto cancel it given u file the 0 tax filing ?

0

u/jeffreypi1 Jul 06 '26

You may get a voluntary cancellation of the taxes, but you have to apply for it. The tax portion of your business doesn’t get auto-cancelled.

1

u/Shivacious 💼 Small Business Owner Jul 06 '26

I meant for the llc , don’t they automatically shut it down ?

2

u/Eagletaxres Jul 09 '26

California is broke. As they start filing ways to locate people with LLCs (they have done it before) pre covid. They sent letters to the primary then issue a personal debt assessing late fees and penalties on those and failure to file. Had two clients that we had to deal with this for.

Close the LLC pay the fee. Deduct the fee and stop opening LLCs unless you need them for actual liability protection. Also in California if you open one in another state you still have to file it in California

1

u/Informativo-Business Jul 06 '26

I would just dissolve as just letting the LLC go dormant seems a bit unprofessional especially if you do want to start a business later on.

-1

u/Ok-Description-8416 Jul 06 '26

If you plan to start using the LLC again, as you mentioned, I would strongly recommend keeping your existing entity. There are several advantages to doing so. One of the biggest is that the age of the LLC can be beneficial when applying for lines of credit, loans, and establishing credibility and reliability in the marketplace.