So back in January I filed the articles for an LLC because I had this big idea for a woodworking side hustle. Paid the state fee, got the EIN, felt like a real business person for about 48 hours. Then life happened and I haven't sold a single thing. Not one cutting board. Now I'm staring at my annual report notice and wondering if I should just let it dissolve or actually try to do something. Is there any downside to keeping it dormant while I figure it out?
LLC
I formed an LLC and haven't done anything with it yet
Dormant LLCs are fine in most states as long as you file the report and pay the franchise tax or whatever your state calls it. Just don't ignore that notice. The penalties pile up quietly.
You formed a business and did zero customer discovery for six months. The LLC isn't the problem, the absence of a plan is.
Fair. I did make a few things, just didn't sell them. But I hear you.
I did the exact same thing. My LLC sat for 14 months. Then I actually started using it and the only regret was the two wasted filing fees. Not a big deal.
Depending on your state, there may be a minimum tax even with zero revenue. California's $800 franchise tax comes to mind. Check that before you decide to let it ride.
Just curious, what state? That changes the answer a lot. Some places have basically no maintenance cost, others will bleed you.
Oregon. Annual report is like $100, no franchise tax that I've found. So it's not expensive, just annoying.
Then stop overthinking the paperwork and go make one cutting board this weekend. You can dissolve it later if it still doesn't happen.
"I formed an LLC and haven't done anything with it" is basically the official hobbyist woodworker starter pack. Welcome.
Keep records of your formation costs at least. If you ever sell anything, those are startup expenses you can deduct. Small thing but easy to lose.
Honestly the liability protection doesn't mean much if you never conduct business. It's not doing anything for you dormant. But it also isn't hurting you.
One thing nobody mentioned, some states require you to file a zero return or report even with no activity. Miss it and you get administratively dissolved, which is fixable but a hassle.
I'll call the state office tomorrow and confirm what's actually required. That seems like the sensible first step I've been avoiding.
Calling the state is free. Not calling them and getting a surprise letter in two years is not. Do the boring thing.
Not to derail but has anyone actually used a registered agent service they like? I'm forming a second LLC and mine is getting pricey.
We were talking about whether to keep a dormant LLC alive, and now we're shopping for registered agents. Classic forum.
For what it's worth, my two cents is keep it and use it. Worst case you spend a hundred bucks a year to maintain an option. Cheaper than forming it again in 2027 when the woodworking bug bites.