Dissolve the LLC?
Ben's wife has a small business giving music lessons. She hasn't had as many clients since the birth of their first child, and Ben 's wondering if they should dissolve the LLC. Dave tells him to look at the numbers a little more closely before making a decision.
QUESTION: Ben and his wife are debt-free. She has a business giving music lessons, and they formed an LLC last year when she was making $3,000 a month. Since then, they’ve had a baby and her income has dropped to around $700 per month. Ben wonders if they should dissolve the LLC. Dave says it all depends on the numbers.
ANSWER: In most states, the only cost of an LLC is the money you pay when you initially set it up. Then there’s the money you pay when you file your tax return on the LLC once a year.
There usually aren’t other fees associated with it, but even if there are, it wouldn’t hurt to keep the LLC in place as long as the fees aren’t killing you. If you spend $3,000 to stay open and you’re making $700, then you’d close it, right? Even if your fees are $100 or so and you spend another $50 to file the tax return — because you do have to file a separate return on this — you can still close it down. But you went to the trouble to open it, and you may use it again someday.
So as long as you don’t have fees that are making you cringe, I’d probably keep it open. Easy enough?