What Is an Inactive Company?

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In order to qualify as "inactive" a company has to meet some very specific criteria. Learn what it means to be an inactive company with help from a business consultant in this free video clip.

Part of the Video Series: Finance & Business Advice
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Video Transcript

Hi, my name is Alexis Guerreros. I'm a business consultant. Today, I'm going to talk to you about inactive companies, also known as inactive corporations. Now, when you start a company and you file the paperwork, you own the name, and you have the business ready to go, you now own a corporation or a company. Congratulations! Here's the problem: Say you go a while - let's give an example, two years - you actually haven't started doing business yet. You have zero employees, you have zero money coming in, and zero money going out. You actually just own the company name; you don't actually have a business. The government considers this an inactive corporation, because you're not actually doing anything with the business. So, you probably think to yourself, "Well, I'm not doing anything with it, I just own the name. No business is actually being done, I don't have to file taxes." That's wrong. You have to make sure that you file your taxes for this corporation, because the government is going to think you're avoiding taxes, and although no business is going in or out, and that's all you'll really file, you still need to file, because the business still exists. So, keep in mind when you're doing your taxes, if you file for a couple different company names, or maybe you thought of a company last year that you wanted to start, and you filled out the paperwork, but you actually haven't gotten around to doing it, make sure you file, because you can get in a lot of trouble otherwise. And, good luck with starting that business!

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