A dormant US LLC does not stop costing you money or filing obligations just because you stopped using it. This guide covers what an inactive LLC still owes, how to close it down the right way, and how PowerLaunch handles dissolution on the Run and Scale plans.
Why "doing nothing" is not free
Once your LLC is on the books with a state, that state expects you to keep filing and paying, whether you have any revenue or not. Most states charge an annual or biennial report fee just to keep the entity active. If you skip it, the state does not quietly forget about you. It usually marks the LLC as delinquent, then administratively dissolves it after missed cycles, sometimes with late fees added first.
The IRS side is separate from the state side, and it does not care that the business is inactive either. If your LLC is a foreign-owned single-member LLC, you generally still owe Form 5472 with a pro forma 1120 by April 15 each year the LLC legally exists, even with zero transactions. Filing "nothing happened" is still a filing. Missing it can trigger penalties that are large relative to the size of most small LLCs, and those penalties do not disappear just because the business never made money.
So an LLC you are not using can quietly rack up two kinds of debt: state fees for staying on the books, and IRS exposure for not filing while it is on the books.
What actually happens if you ignore it
Here is roughly how neglect plays out over time. Exact timing and fees vary by state, so check the specific state's site for its current schedule.
| Stage | What typically happens |
|---|---|
| Report due date passes | State marks the LLC as delinquent, late fee may apply |
| Filing still not made | State suspends or revokes the LLC's good standing |
| Continued inaction | State administratively dissolves the LLC |
| Meanwhile, federally | Form 5472 and pro forma 1120 obligations continue to accrue if the LLC still legally exists |
Administrative dissolution by the state is not the same as closing the business properly. It can leave you with unresolved federal filing gaps, an open bank account tied to a dead entity, and a state fee balance that can follow the responsible party in some circumstances. It also does not stop the IRS from expecting returns for the years the LLC was legally active before dissolution took effect.
The right way to shut it down
Proper dissolution has a few steps, and skipping one usually just moves the problem to later.
- File the dissolution paperwork with the state. This is a formal filing, not just letting the annual report lapse. Requirements and fees vary by state.
- File final federal returns. This includes the final year's Form 5472 and pro forma 1120 for a foreign-owned single-member LLC, marked as a final return.
- Settle any outstanding state fees. Some states will not process a dissolution filing if you owe back fees, so this often has to happen first.
- Close the business bank account. Do this after you are confident no more transactions are coming, since reopening a closed account is harder than keeping it open a bit longer.
- Keep your records. Even after dissolution, hold on to formation documents, tax filings, and bank statements for your own records in case a state or the IRS ever asks a question later.
None of this is complicated on its own, but it is easy to get the order wrong, especially the sequencing between settling state fees and filing the dissolution itself.
Free dissolution on Run and Scale
PowerLaunch's Run and Scale plans include free dissolution. That means when you are ready to close the LLC, PowerLaunch handles the state dissolution filing at no extra service charge, on top of the tax filing and bookkeeping support already built into those plans.
| Plan | Annual state report | Tax filings (5472 and pro forma 1120) | Dissolution when you are done |
|---|---|---|---|
| Launch $295/yr | Not included | Not included | Not included |
| Run $1,995/yr | Included | Included | Free |
| Scale $2,995/yr or $329/mo | Included | Included | Free, plus dedicated bookkeeper support through the wind down |
State filing fees are always charged at cost on every plan, including for dissolution filings, since PowerLaunch does not mark those up or absorb them.
If you are on Launch and your LLC has gone dormant, it is worth moving to Run before you dissolve. That gets your final year's federal filings done correctly and gets the dissolution filing itself included, rather than paying for each piece separately.
Closing the bank account
Bank closure is the bank's own process, not something PowerLaunch controls. In general, plan to close the account only after the state dissolution is filed and your final tax return is done, since you may need the account open briefly to receive any last refunds or to pay a final invoice. Once you are ready, contact your bank directly to close it. Keep a record of the closure confirmation for your files.
A quick honesty check
If your LLC is inactive but you might use it again within the next year or two, it is often cheaper to keep it in good standing on the Run plan than to dissolve it now and reform later, since forming a new LLC means new state fees and a new EIN wait. If you are certain you are done with it, dissolving properly now is cheaper than letting penalties and delinquent fees build up over more years of inactivity.
What to do next
If your LLC needs its overdue state reports and federal filings brought current before you decide whether to keep it or close it, start or upgrade your plan at powerlaunch.solutions/signup. If you are not sure whether to keep the LLC open, dissolve it, or move to Run first, book a free 20-minute consultation at powerlaunch.solutions/book and walk through your specific state and filing history before you make the call.
