Are You Forgetting About Your Old Corporation?

You have a great idea for a new business, so you naturally take the next step to move your idea forward. You incorporate your business. This may be a wise choice to make, but what happens if your new company never becomes active and you ignore it? Or what about a corporation you have that was once active and is now dormant? Should you really care anymore?

When you own an inactive corporation that you have been ignoring, this can create an ever-enlarging tax liability. Even though the corporation is inactive, you are still required to file federal and state income tax returns and possibly sales tax returns.

A New Jersey corporation still continues to be liable for minimum corporate taxes, even if it doesn’t have any income or assets. The minimum tax is currently $520, which can easily double after several years go by due to interest and penalties. Between late filing penalties, late payment penalties, and interest assessments, there is no escape. If your corporation was registered to collect sales taxes and has no longer been submitting sales tax returns, the problem becomes worse. Additionally, the IRS assesses monthly late fees for unfiled corporate and partnership returns.

I think that I am making my point that you need to take action. I have been coming across this situation more and more. If you have an old corporation or partnership, please contact our office so that we can advise you on the proper course of action.