What happens if I don't annually renew my LLC with the state?
I bought a property almost a year ago in the name of an LLC. Now that a year has gone by, the state is asking me to renew the LLC. Do I need to renew it? What happens if I don't? I assume if it expires, someone can't create an LLC in the same name and just claim ownership of my property, right?
#1 Short-Term & Vacation Rental Discussions Contributor
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- Greer, SC
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#1 Short-Term & Vacation Rental Discussions Contributor
- Investor
- Greer, SC
Each state is different. In SC I don't have to do anything.
I would google your state and see what the requirements are.
Even though you didn't say, I am guessing Virginia?
Your LLC goes dormant. This effectively means you have no asset protection, although if you haven't been maintaining corporate formalities, you didn't have that anyway. You also will not be able to refinance with a dormant LLC.
Theoretically, nobody can claim ownership of your LLC and sell the property, but there is a lot of fraud out there, so it has likely happened before. Because of this, you may also have some challenges if you let your LLC stay dormant for a long period of time and then try to re-activate it when you want to sell.
In short, not-renewing your LLC would be a bad decision. Either properly maintain your LLC or move the property into your name.
#3 1031 Exchanges Contributor
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- Las Vegas, NV
In Las Vegas there was a "huge" fine/penalty. Something like $800 instead of $100? Luckily the LLC owed it, not me, and it didn't own anything. So there was no need to pay it, just stop using the LLC.
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#3 All Forums Contributor
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In CA, until you actually close the Corp or LLC, you must continue to pay the annual fee (it was $800).
They will add penalties so after a few years you owe them a few thousand.
Better to either use it or close it.
I called and asked them to cancel one of mine and they did it for free. Online it looks like you have to pay to cancel. I would call and see if you get lucky with the right person.
Good luck 🍀
The LLC owns the property? How can you dissolve an LLC that has assets? In NJ they call it an annual report. The funny thing it isn't any report. It is just pay me $75.00. So you have to pay the $75.00. If you don't there are penalties associated with it.
It depends on the jurisdiction.
In some states, if the LLC does not remain in good standing, that will eventually lead to the administrative forfeiture/dissolution of the LLC. As a property owner a forfeited/dissolved LLC often cannot convey out... it would need to reinstate. Reinstating is a lot more costly (all annual fees, penalties, reinstatement filing fees, etc.) than simply keeping the registration in good standing. It makes zero sense to allow that to happen when the LLC currently owns property.
Why did you form an LLC and hat it purchase a property if you haven't intended on keeping that entity alive? Either dissolve the LLC and transfer the ownership or keep the entity active.
@John Castillo here you have to pay the business tax every year and file your annual report. If you don't they will find you! I think you need to make it officially inactive.
You should probably renew it or pay the $25.00 in your state to cancel it. If it goes into default and you want to reinstate its $100 + unpaid fees.