Tax implications when closing down an LLC
December 16th, 2019 → 12:38 pm @ Carol
Your book Business Tips and Taxes for writers was a big help to us when I started self publishing years ago.
I actually formed an LLC in Michigan and had all the income and accounts run through that. My book is now barely selling, and although it only costs $25/yr to keep the LLC alive, it’s a pain to always remember to file annual statements, file a state sales tax return for $0, etc.
Is there a smooth way to close the LLC, redirect our Amazon royalty checks, and close the business checking account? Is it as simple as going through all those motions, or are there big tax implications when you shut down an LLC?
If this question is too involved and I should seek local advice, I totally understand. I guess I’m more looking for general advice on whether there would be some tax penalty or benefit and then I’d take it from there with some local help..
Thanks! Joe C.
Joe,
You asked,
Is there a smooth way to close the LLC, redirect our Amazon royalty checks, and close the business checking account?
Is it as simple as going through all those motions, or are there big tax implications when you shut down an LLC?
Honestly, I don’t know! I’ve never closed an LLC. As a CPA, I cannot open or close an LLC on behalf of a client because that is considered practicing law and I cannot practice law.
Here is some advice from an attorney (Nolo Press): Dissolving and Winding Up Your Single-Member LLC
The article does say that most states require you to file some paperwork to dissolve your LLC.
I can tell you that LLC status for a single member LLC, does NOT alter your tax situation. You have been filing and will continue to file a Schedule C with your personal Form 1040. The IRS doesn’t care if your sole proprietorship has LLC status or not. In fact they call LLC status “disregarded status” when it comes to taxes.
Tags: LLC
