Tax Return for an LLC with No Activity

Do I Need to File a Tax Return for an LLC with No Activity?

Even if your LLC did not do any business last year, you may still have to file a federal tax return.

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.

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. An LLC may be disregarded as an entity for tax purposes, or it may be taxed as a partnership or a corporation.

Tax Elections for LLCs

If an LLC only has one owner (known as a “member”), the Internal Revenue Service (IRS) automatically disregards it for federal income tax purposes. The LLC’s member reports the LLC’s income and expenses on his or her personal tax return.

If an LLC has two or more members, the IRS automatically treats it as a partnership. The LLC files an informational partnership tax return and the members also report the LLC’s income and expenses on their personal tax returns.

However, an LLC can change these default classifications and choose to be, or not to be, taxed as a corporation. To do this, the LLC must file Form 8832 with the Internal Revenue Service. The LLC may make this election when it is formed, or it may elect to change its tax classification at a later date.

Tax Return for an LLC with No Activity

Filing Requirements for Disregarded Entities

An LLC that is not considered a separate entity for federal income tax purposes is taxed in the same way as a sole proprietor: t