Should I Maintain My Inactive LLC?

It depends. Many business owners in Michigan have various LLCs registered with the state. Some may be in use, some not.

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Sometimes, maintaining inactive LLCs can open you up to liability.

When starting a business or creating business ideas, many people register a variety of LLCs with the State of Michigan. While common, having multiple LLCs can lead to complications and added work.

LLCs require maintenance – like keeping records, tax filing, and more. This can divide a business owner’s attention and sometimes, things fall through the cracks.

Maintaining these inactive LLCs can also potentially pose legal risks. Depending where you filed your LLC, some entities that fail to remain in good standing can incur penalties in some states. Outstanding tax liabilities also accrue interest.

There is also the issue of potential claims and outstanding creditors. Sometimes if the LLC is there long enough, creditors will pop up. Also, members of the LLC may not know about claims against them .

You may want to keep the LLC if you plan on using it someday. But this might only be true if you can adequately maintain it, file the appropriate documents on time, and comply with all requirements.

However, if you don’t think you are going to use the LLC or are worried about the requirements, you may want to dissolve your inactive LLC.

If that’s the case, make sure to properly wind down and dissolve your LLC. Look to the articles of incorporation and operating agreement, or the default rules, for guidance.

We always recommend working with your attorney to make sure the dissolution is done correctly to avoid further opening yourself up to liabilities.

If you have questions about dissolving or creating a new entity, contact Rickard & Associates today!

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