Can I use a business name if it's inactive?
Asked by: Ms. Marlen Hoppe Sr. | Last update: February 19, 2026Score: 4.6/5 (12 votes)
Yes, you can often use an inactive business name, especially if it's fully dissolved, but it depends on the state's rules, the reason for inactivity (administrative dissolution vs. voluntary dissolution), and whether the original owner had registered trademarks, with some states holding names for a period (e.g., 1 year) before release, so always check with the Secretary of State and search trademarks.
Can you use a business name if it's inactive?
If it's dissolved you can more than likely use the name, but if the business is inactive the state may not let you use the name. Many states have a waiting period before inactive or dissolved companies' names can be used by others, as inactive businesses do have a time period to reactivate.
Can you use an inactive LLC?
If a corporation or LLC is inactive by means of revocation or administrative dissolution, it cannot legally transact business in a state.
Can you take over an inactive LLC name?
The LLC acts as a distinct legal person. If the entity is no longer in good standing or has been administratively dissolved by the California Secretary of State or Franchise Tax Board, the property may remain in the LLC's name indefinitely. It is effectively “trapped” without a mechanism for lawful transfer.
Can you use a business name without registering it?
You may not legally use your business name without first registering it as one of the many business entities recognized by your state and the IRS. The first step in the registration process is to do a search of your business name and make sure that it isn't already registered by somebody else in your state.
What To Do If Your LLC Becomes "Inactive"
Is an unregistered business illegal?
Starting a business without registering it is possible, but it often classifies the business as a sole proprietorship, subject to specific risks and restrictions. Operating without a license may result in fines, closures, lawsuits, and damage to your business reputation.
How do I know if I can legally use a business name?
To check if a business name is taken, search your state's business entity database (usually available on the Secretary of State's website). You should also check trademark databases such as the USPTO to avoid legal conflicts. A quick domain name search is also helpful if you plan to have an online presence.
What happens if you have an LLC but don't use it?
If you don't use your LLC, it becomes inactive or dormant, but still legally exists, leading to potential penalties like late fees, accruing franchise taxes, suspension by the state, loss of good standing, and even administrative dissolution, while still carrying obligations for annual reports and taxes until you formally dissolve it, which is generally the best approach to avoid ongoing costs and liabilities.
Can a business still run if it's dissolved?
No, a dissolved company cannot legally continue normal business operations; it loses its corporate status and protections, meaning owners face personal liability for new debts, while activities are restricted to winding up affairs (like selling assets) for a set period, often 2-3 years, after which it's effectively gone unless reinstated. Continuing to operate beyond liquidation is risky, exposing individuals to personal responsibility and preventing lawsuits, but many states allow reinstatement by filing paperwork and paying fees.
Can I reuse a business name?
And so the good news is the California Secretary of State's Office will accept a filing to form a new corporation even if it has the exact same name as a corporation that was previously dissolved.
Can I use an old business name?
If you want to keep using an old trading name, you need to register it as a new business name.
What happens if you have an LLC but don't file taxes?
If an LLC fails to file its tax return, the IRS will impose penalties and fees. These penalties can include a failure-to-file penalty, which can be as much as 5% of the unpaid taxes per month, up to a maximum of 25%. Additionally, interest will accrue on any unpaid tax liabilities.
How do you activate an inactive LLC?
Reinstating a business requires filing with the Secretary of State, and often with the Department of Revenue or Taxation. Researching your business' unique requirements, and preparing all of the filings takes hours of your executives' time.
Will an inactive LLC affect my credit?
But if you leave your LLC sitting around as “inactive” or, even worse, suspended, it can seriously hurt your business credit. Imagine trying to launch something new–apply for a business loan, or build a relationship with a potential partner.
What do you call yourself if you own an LLC?
If you own an LLC, you are legally called a Member, but you can use various public-facing titles like Owner, Managing Member, CEO, President, or Founder, depending on your role, state rules, and desired image, as long as it's not misleading and aligns with your operating agreement.
What names should you not use in an LLC?
Your LLC's name can't contain the words like “bank,” “trust,” “trustee,” “insurer,” “insurance company” or any other words suggesting you're in the insurance business (unless you are). You can't include things like “incorporated,” “inc.” or “corporation,” because your LLC is not a corporation.
Can I just walk away from my limited company?
Yes, directors can walk away from a limited company with debts, but whether they can do so without legal or financial consequences depends on how the company was managed, the nature of its debts and if any personal guarantees were made by the director.
Do you still owe money if a business closes?
Yes, even if a company is going bankrupt, you still have to pay what you owe them. Why? Just because a company is going bankrupt does not mean your debt is eliminated.
How much to reinstate a company?
The benefits of registering a new company are:
Cost-benefit, since reinstatement requires the payment for the filing of the reinstatement application (R200. 00) and filing of all overdue annual returns (based on entity category and payment scale) while a new company registration requires only payment of R175.
Should I dissolve my LLC or leave it as inactive?
You should generally dissolve your LLC, not leave it inactive, because an inactive LLC still faces ongoing state fees, tax obligations (even for $0 income), and legal liabilities, while formal dissolution ends these requirements and protects you from future penalties, fines, or lawsuits. While letting it lapse might seem easier, it creates unnecessary financial burdens and compliance risks, making formal dissolution the safer, cleaner option for ending the entity's legal existence.
Can I sell an LLC I'm not using?
Yes, you can sell your LLC, either fully or partially. You must find a buyer and agree on a valuation; this often requires professional assistance. An operating agreement or buy-sell agreement is crucial to guide the process and prevent disputes.
What is the 60 month rule for Form 8832?
Once a business has elected a new classification by filing Form 8832, it is subject to the 60-month limitation rule. After making this election, the business is typically restricted from filing forms to make another classification change for 60 months, or five years.
Can I use a business name that's already taken?
How trademarks may impact your use of a name. Trademarked names are registered with the U.S. Patent and Trademark Office (USPTO) and are protected nationally. If a business name is already trademarked, you are prohibited from using it even if the company operates in a different state to yours.
What is not allowed in a business name?
Most states will not allow a business to:
Use a word that implies a company is a government entity (e.g., Federal, United States, etc.). Use a business name that misleads the public to believe the company provides something it does not.
How much does it cost to trademark?
A federal trademark costs a base fee of $350 per class to the USPTO, plus potential surcharges for complex applications (like using free-form text), totaling around $350–$850 for basic filings, but can increase significantly with attorney fees (often $1,000+) and ongoing maintenance fees (e.g., $225-$525 every 5-10 years). Costs vary based on filing method (TEAS), the number of goods/services classes, and if you hire a lawyer.