LLC Tax Tips: Lessons I Learned From Having Mine Shut Down

By Chelsea Baldwin, Contributor, on December 13, 2017

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I like to think that I always have my stuff together. Always. But when it came to maintaining my LLC, something terrible happened that made me search for all of the LLC tax tips I could find — and quick. I’m a serial planner and in denial about it, but truth be told, it does more good than bad. Which was why when my accountant told me I didn’t have an LLC anymore (when he was simply trying to file some routine paperwork), I went a little berserk.

What? How is that even possible? I do everything I’m supposed to, and I file everything on time!

Yet, here I was, with an LLC that had been administratively dissolved by the state of North Carolina due to neglect. If something bad had happened while it was dissolved, I wouldn’t have had the LLC protections in place, and my personal assets would be up for grabs. I’m sure you other serial planners get the point: I wasn’t in control, and I didn’t like it.

LLC tax tips: LLC dissolved

I’m happy to report though, that after some paperwork and a $500 fee, everything’s back in working order and it’ll never happen again. If you’re a fellow well-meaning LLC owner who really can’t afford to have something like this happen to you, please read on for my LLC tax tips.

Hire a Lawyer You Trust

This was my first mistake. To be honest, though, I didn’t know the guy wasn’t trustworthy, which is where the second tip will come in handy.

I found my lawyer through a Google search, and he was the first guy I got in touch with that was willing to work with me to file my LLC paperwork over the internet. I was overseas at the time I wanted to make it happen, so working with someone hip enough to understand technology was important. I’d also heard horror stories about using automated legal service websites, so I wanted to work with a real person.

But if I could go back in time and re-do it, I’d ask around for peer recommendations. I did know other entrepreneurs from North Carolina, and I’m 100 percent confident they would’ve given me advice that would have helped me here, but I just didn’t think about it at the time.

If you already know a business lawyer you feel like you can trust, work with that person. But if not, find a fellow freelancer and ask if they have any recommendations to share with you.

Use a Mailbox YOU Check for Business and Legal Correspondence

The main reason my LLC was administratively dissolved was because I hadn’t filed my annual reports at all in the two years that my LLC had been an LLC. And it wasn’t because I was negligent or procrastinating (serial planner, remember?), but because I had no idea I needed to do it.

In the paperwork I filled out with my lawyer to establish my LLC, his office was listed as the main contact for legal correspondence from the state. I didn’t think twice about it, because surely if something happened and I was getting legal letters from the state, I’d need legal representation, right?

Wrong. (Sort of.)

The fact is, you should use a mailbox that you personally check for business and legal correspondence. The state was sending out notices to file my annual reports, but because my lawyer’s office was less-than-fabulous, they were sent straight to the shredder without any notice.

I didn’t need legal representation to help file an annual report, and even if I did, I could’ve gotten in touch with someone to help me. Never give away your legal power to someone else. Keep yourself as the main contact.

File Your Annual Reports Every Year

I know this seems like it should go without saying, but just make sure to file your annual reports every year. Apparently most states give you a grace period (mine went on for two years), but it’s not worth losing the protection of your personal assets. Plus, you’ll have to pay a fee every year you don’t file — and a decent-sized fine on top of that.

If you’re not sure how to file your annual reports, refer to the accountant you use to file your taxes. He or she should be able to do it for you, or at least guide you in the right direction.

Check Your Status and Paperwork Today

If you’ve literally just walked out of your accountant’s or lawyer’s office and they’ve told you everything is fine, you probably don’t need to do anything right now.

But if it’s been a while, or if you’re even remotely unsure, it’s time to check on the status of your LLC (and any applicable paperwork). In most states, you can check on the Secretary of State’s website, but a quick inquiry to your accountant or lawyer will get you information on exactly where to go check for yourself. You can also call the Secretary of State’s office directly.

As your business grows, having an LLC can set you up to save a lot of money. So if you’re serious about being in business for yourself and protecting your personal wealth, make sure all your LLC paperwork is up-to-date.

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