Published October 4, 2026
The most common version of "do you have to pay for an LLC if you don't use it" goes like this: someone formed an LLC in 2021 for a side project that never launched, never opened a bank account, never earned a dollar, and assumed the whole thing just faded away. Then a letter arrives, or they try to form a new business and discover the old one is suspended with years of back fees. The state never forgot about it. The state has a very good memory for money it is owed.
Yes, you owe it: the privilege-of-existing principle
State fees for LLCs are not payment for doing business. They are payment for the privilege of existing as an LLC in that state. California's $800 minimum franchise tax is owed for every year the LLC is registered, revenue or no revenue. Delaware's $300 annual tax works the same way. Most annual report fees, from $9 to $500 depending on the state, apply whether you filed one invoice or none. Inactivity is not an exemption. It is just a quieter way to owe.
That surprises people because it feels wrong. You paid a filing fee for a thing you never used, and now the same government wants rent on it. But the logic is consistent: the state gave you a liability shield, a legal identity, and a public registration, and it charges maintenance on all three. Use of the shield is optional. Payment for it is not.
The exceptions: where an unused LLC is free
A few states genuinely charge nothing to keep an LLC alive. Arizona, Missouri, and New Mexico have no annual report at all, which means an inactive LLC there costs $0 a year to maintain. Ohio, Idaho, Minnesota, and Mississippi require reports but charge no fee. New York's biennial $9 filing fee is waived for LLCs with no New York-source income, which covers a dormant LLC. If your unused LLC lives in one of these states, the urgency is much lower. Everywhere else, the meter is running.
Do you have to pay for an LLC if you don't use it? The California case
California deserves its own section because it produces more of these horror stories than every other state combined. The $800 franchise tax is due for every year the LLC exists, including the year you formed it, even if you formed it in December and did nothing. People who ignore an unused California LLC for four years do not owe $3,200. They owe $3,200 plus penalties and interest, which the Franchise Tax Board compounds with genuine enthusiasm. Attorneys who answer this question online give the same advice every time: if you are not using a California LLC, dissolve it. Today. The longer you wait, the more the state invents for you to pay.
Dissolve it or keep it: the actual decision
There are exactly two rational moves. Dissolve the LLC formally with the Secretary of State (and file any final tax returns), which stops the meter. Or keep it and pay the annual fees, which makes sense only if you plan to use it soon and the fees are low. "Ignore it" is not a third option. It is the dissolve option with extra penalties attached, executed on the state's schedule instead of yours. Administrative dissolution, which is what ignoring it eventually produces, also strips the liability shield for the period the LLC was out of good standing, which is the one thing you paid for in the first place.
One more wrinkle: do not assume you can just stop paying and walk away in every state. Some states will dissolve you automatically after a few missed payments. Others, California prominent among them, keep the tax obligation alive and keep billing. Know which kind of state yours is before you choose the ignore strategy.
My honest take
I think the real mistake happens at formation, not at dissolution. People form LLCs speculatively, because an online ad told them every business needs one, and the filing fee feels like a commitment device. It is not. It is a subscription you just signed. Before forming an LLC, look at the five-year maintenance cost in your state, which you can do on LLC Cost by State, and ask whether the project justifies it. A dormant $800-a-year California LLC is not a failed business. It is a successful subscription to nothing. If you already have one sitting idle, dissolve it this month. Future you, the one not paying four years of back taxes, will be grateful.
Frequently asked questions
Do you have to pay for an LLC if you don't use it?
In most states, yes. Annual report fees and franchise taxes are charged for existing as an LLC, not for doing business. Zero revenue does not zero out the bill.
Does a dormant LLC owe California's $800 franchise tax?
Yes, for every year it is registered. Unpaid amounts accumulate with penalties and interest, which is why unused California LLCs should be dissolved promptly.
Are there states where an inactive LLC costs nothing?
Yes. Arizona, Missouri, and New Mexico have no annual report at all. Several other states require reports with no fee, and New York waives its fee for LLCs with no New York-source income.
Should I dissolve an LLC I am not using?
Usually yes. Formal dissolution stops annual fees from accumulating. Ignoring the LLC leads to penalties and eventually administrative dissolution, which costs more to fix.
Do I still have to file taxes for an LLC with no income?
It depends on tax classification. Single-member LLCs with no activity generally have nothing to file; multi-member LLCs may still need Form 1065. Confirm with a tax professional.
See every state's fees in one table.
LLC Cost by State compares filing fees, annual report fees, and franchise taxes across all 50 states plus DC, with a 5-year total cost calculator.
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Not legal advice: Fee schedules change and this summary reflects figures verified in 2026. Always confirm current fees with your Secretary of State before filing.