I'm in almost the exact same boat - formed my LLC in early 2023, got an EIN, then never did anything with it. Reading through all these responses has been both helpful and terrifying! The potential penalties and back fees are making me realize I need to act fast. One question I haven't seen addressed - if you never opened a business bank account and literally never conducted any transactions (not even a single dollar), does that change anything about the filing requirements? I'm wondering if the IRS has any simplified process for truly dormant entities that never had any financial activity whatsoever. Also, for those who mentioned using tax professionals, what did you search for to find someone experienced with LLC closures? I'm worried about paying for advice from someone who might not be familiar with these zero-activity dissolution situations. The state-specific requirements are definitely the most confusing part. I'm in Texas, and I'm seeing conflicting information online about what's actually required here for dissolution when there was no business activity. Has anyone dealt with Texas LLC dissolution specifically?

I just went through this exact process last month for my never-operated LLC, and I wanted to share what actually worked for me since I see a lot of conflicting advice here. The reality is that even with zero activity, you're still on the hook for filing requirements. I was a single-member LLC that never did anything, and here's what I actually had to do: 1. Filed Schedule C with my 2024 personal tax return, marking it as "final" - all zeros, but still required 2. Sent a letter to the IRS notifying them of business closure (include EIN, business name, address, and closure date) 3. Filed Articles of Dissolution with my state ($50 fee in my case) 4. Paid one final annual report fee to my state before they'd process the dissolution The whole process took about 6 weeks and cost me around $150 total. Not fun to pay fees for a business that never made a dime, but way better than continuing to rack up annual fees indefinitely. One thing I learned: don't wait! I procrastinated for two years thinking "I'll deal with it later" and ended up paying an extra year of state fees that I could have avoided. The sooner you start this process, the less it will cost you in the long run. If you're overwhelmed by the state-specific requirements, most Secretary of State websites have step-by-step dissolution guides. They're actually pretty straightforward once you know what to look for.

Great question! I deal with similar situations regularly in my practice. A few additional considerations beyond what others have mentioned: Make sure to keep the wedding invitation as documentation - it shows you were specifically invited due to your business relationship. Also, consider having a brief follow-up meeting or call with the client after the wedding to discuss any business topics that came up during conversations at the event. This helps establish that business discussions actually occurred. One thing I'd add about the gift situation - if you're giving cash or a check, that's clearly subject to the $25 limit. But if you're contributing to a honeymoon fund or registry item, the deduction treatment might be different. The key is whether it's considered a "gift" versus some other type of business expense. Also, don't forget to prorate your hotel costs if you extend the stay for personal reasons. Only the nights directly related to the business purpose (wedding + any business meetings) would be deductible. The documentation suggestions from others are spot-on - this is exactly the type of expense the IRS scrutinizes, so having a clear paper trail showing the business necessity is crucial.

One strategy I've used successfully for client events like this is to create a simple business memo before you go documenting your business justification. Include details like: - The client's annual revenue/importance to your business - Specific business relationships you hope to maintain/develop - Any pending contracts or negotiations that could be affected - Names of other business contacts who will likely attend This creates a contemporaneous record of your business intent that's much stronger than trying to recreate the justification later if audited. I also recommend taking discrete photos of business cards you collect or jotting down notes about business conversations you have at the event. For the substantial gift concern - consider splitting it between a modest personal gift (subject to the $25 limit) and a more significant branded corporate gift or service voucher from your company (which could qualify as advertising/promotional expense rather than a business gift). Many clients actually prefer receiving something unique from your business over generic expensive gifts anyway. The key is being proactive about documentation rather than trying to piece together the business case after the fact!

I bought single W2 and W3 forms at Walmart in the tax forms section last year. They had small packs (I think it was like 3 forms) for household employers. Check the office supply/tax preparation aisle. This was in February though, so they might only stock them during tax season.

Just wanted to mention that if you're a household employer, you might want to consider using a nanny payroll service for next year. I use Homepay and they handle all the W2/W3 filings automatically. It costs a bit more than doing it yourself, but they take care of all the quarterly filings, unemployment taxes, and year-end forms. Saved me so much hassle!

As someone who's dealt with IRS audits before, I can confirm what others are saying here. The IRS absolutely does NOT require tax preparers to collect and store copies of birth certificates, social security cards, or utility bills for routine tax preparation. What's particularly concerning about your situation is that your preparer is being vague about the specific requirements. Any legitimate preparer should be able to cite the exact IRS publication or form that requires specific documentation. The fact that he can't give you specifics is a major red flag. For due diligence requirements (mainly for EITC, Child Tax Credit, and education credits), preparers need to verify eligibility, but this typically involves asking questions and noting in your file that they've seen certain documents - not making copies. The IRS Publication 4687 outlines these requirements clearly, and nowhere does it mandate keeping copies of personal documents. My advice: ask your preparer to provide the specific IRS regulation requiring these documents. If he can't, or continues being vague, find a new preparer immediately. You can also report suspicious practices to the IRS Office of Professional Responsibility. Trust your instincts - if it feels wrong, it probably is.

I work for a regional CPA firm and can confirm this is absolutely NOT standard practice. We have strict policies about document handling that align with IRS guidelines, and what you're describing sounds like either incompetence or something potentially fraudulent. For context, the IRS Publication 4687 (Due Diligence Requirements) that Gabriel mentioned is the key document here. It outlines what preparers need to do for certain credits, but it emphasizes verification through questioning and review - not document retention. We typically document in our workpapers that we "reviewed" or "examined" certain documents, but we don't make copies unless there's a very specific reason (like an ongoing audit situation). The red flags in your situation: 1) Vague explanations about "new requirements" 2) Inability to cite specific IRS regulations 3) Requesting excessive documentation like utility bills and report cards 4) Insisting on keeping permanent copies of sensitive documents Regarding reporting to OPR - I'd say yes, especially if you suspect this preparer might be doing this to other clients. Even if it turns out to be incompetence rather than malicious intent, the IRS needs to know about preparers who are misrepresenting requirements or potentially putting taxpayers' sensitive information at risk. You can file a complaint online at the IRS website, and it helps protect other taxpayers from similar situations. Trust your instincts here - find a new preparer who can clearly explain their documentation policies and cite actual IRS requirements when asked.

This has been such an incredible resource! I'm about 3 months into doing 1099 work as a freelance pet groomer (making house calls), and I've been keeping a basic mileage log but wasn't confident I was doing it correctly. The discussion about reimbursements vs. deductions finally cleared up my confusion - my pet grooming service reimburses me for trips over 15 miles, but I can still deduct the full mileage at the standard rate. That's a huge relief! I'm definitely implementing several strategies from this thread starting tomorrow: - Monthly odometer photos (going to do them on the 1st of each month) - Taking quick photos of client addresses/house numbers for documentation - Upgrading from my basic notebook to a proper spreadsheet with all the details mentioned - Tracking parking fees separately (some clients live in areas where I have to pay for street parking) One thing that's specific to my work - I often carry grooming equipment that's quite heavy, so sometimes I have to make multiple trips from my car to the client's house. I'm assuming this doesn't change anything about the mileage deduction since it's still just one client visit, but wanted to double-check! The audit stories shared here are so reassuring. It's clear that having solid documentation is the key to feeling confident about these deductions. Thank you everyone for sharing your real-world experiences - this kind of peer advice is worth its weight in gold!

This thread has been incredibly comprehensive and helpful! As someone who just started doing 1099 contract work for a mobile phone repair service (traveling to customers' locations), I've been anxious about getting my mileage tracking right from the beginning. The clarification about reimbursements being taxable income while still allowing full mileage deductions is exactly what I needed to understand. My company provides small reimbursements for longer trips, and I was worried I couldn't also claim the standard mileage rate. Reading through everyone's documentation strategies has given me a solid roadmap: - Setting up a detailed spreadsheet with start/end locations, odometer readings, and timestamps - Taking monthly odometer photos for backup (planning to do this on the 15th of each month) - Photographing customer locations/addresses for additional verification - Keeping separate records of any parking fees or tolls The real audit experiences shared here are so valuable - it's reassuring to know that thorough documentation really does make the difference. I was particularly interested in the tip about tracking miles between different customer locations on the same day, as I often have back-to-back appointments in different areas. One specific question for my situation: when a customer reschedules last minute and I've already driven partway to their location before turning around, is that still deductible business mileage since the trip had a legitimate business purpose when it started? Thank you all for creating such a supportive and informative discussion! This peer-to-peer knowledge sharing is invaluable for new contractors like myself.