How is Inactivity Defined?

[throwawaybottle]

What is the name of your state? Delaware

We need to file our annual report. Part of this is reporting inactivity. How is inactivity defined for a corp with no revenue or employees?

 

[quincy]

What is the name of your state? Delaware

We need to file our annual report. Part of this is reporting inactivity. How is inactivity defined for a corp with no revenue or employees?

Inactivity means your corporation has not engaged in any business. Are you intending to dissolve your corporation?

 

[throwawaybottle]

So if we don't have any employees or revenue for the entire year is it inactive for the entire year?

No we do not intend to dissolve the corporation.

 

[Taxing Matters]

So if we don't have any employees or revenue for the entire year is it inactive for the entire year?

If the corporation doesn't do any business activity (no income, no expenses, no employees, nothing) then it is inactive.

No we do not intend to dissolve the corporation.

Then you do at least need to keep up the corporate filings for the state and file a tax return with the IRS. Federal tax law requires corporations to file a return every year until they are dissolved, even if they had no activity.

 

[quincy]

You must file your annual report and pay taxes (including the annual franchise tax) even if you have been inactive for the year, this in order to keep your corporation from being declared void by the State.

Even if your corporation is declared void because you have failed to file annual reports and pay taxes, Delaware allows you to reinstate or revive the corporation at any time by paying a reinstatement fee and paying all back taxes, penalties and interest owed.

 

[throwawaybottle]

Thank you for the reply. So even if we are doing research and development, if we have no employees or revenue, we are inactive for the whole year? Is that correct?

 

[quincy]

Thank you for the reply. So even if we are doing research and development, if we have no employees or revenue, we are inactive for the whole year? Is that correct?

Yes. If your corporation provides no services to the public or if it engages in no business dealings (sales, contracts, etc) it is inactive. But if your corporation files its annual report, it remains in good standing with the state of Delaware.