Filing taxes for newly formed LLC with no business income yet

Hey everyone, I could really use some advice here. I formed an LLC about 7 months ago, got my EIN and everything set up, but I haven't actually generated any income yet. I've been in the development phase and have spent around $4,300 setting things up (website, some basic equipment, business registration fees, etc.). I know I need to file taxes even though I haven't made any money, but I'm confused about the whole process. Do I need to file a separate return for the LLC? I'm the only member, so I think it's a single-member LLC that's a disregarded entity, but not 100% sure what that means for tax filing. Also, can I deduct these startup expenses even though I haven't made any revenue? I've heard about Section 195 startup costs but don't really understand if that applies to me or how to claim them. Any guidance would be super appreciated! This is my first business and I'm trying not to mess up with the IRS right from the start.

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18 comments

Ethan Scott

•8M

Since you have a single-member LLC with no income yet, the good news is your filing requirements are pretty straightforward. As a single-member LLC, you're correct that it's considered a "disregarded entity" for tax purposes, which means you don't file a separate business tax return. Instead, you'll report your LLC activity on Schedule C attached to your personal Form 1040. Even with zero income, you should still report your business and its expenses on Schedule C. Those startup costs you mentioned (the $4,300) can be handled a couple of ways: For startup expenses under $5,000, you can typically deduct them in your first year of business. However, technically speaking, your business hasn't "started" for tax purposes until you begin generating income. Until then, these are considered startup costs under Section 195, which you'll capitalize and begin deducting once you start making money. You might also want to look into the Section 179 deduction for equipment purchases if any of those expenses qualify.

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Ethan Scott

•8M

You should still file a Schedule C this year to establish that your business exists and you're actively working on it. Report zero income and list all your expenses. This creates a paper trail showing you're legitimately in business, which is important if you ever get audited. The startup cost rules are a bit technical - you can elect to deduct up to $5,000 in the first year of business, with the remainder amortized over 15 years. But without income, these deductions essentially create a business loss that flows to your personal return, potentially offsetting other income you might have.

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Nathaniel Stewart

•8M

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Nathaniel Stewart

•8M

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Riya Sharma

•8M

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Millie Long

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Millie Long

•8M

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Santiago Diaz

•8M

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Debra Bai

•8M

Texas is actually one of the better states for LLC owners. They don't have a state income tax, and they don't impose an annual franchise tax on LLCs unless your total revenue exceeds $1.23 million. That said, you do need to file a Public Information Report (PIR) annually with the state, even with zero income, to keep your LLC in good standing. The PIR is relatively simple and can be filed online through the Texas Comptroller's website. Just make sure to file it by the deadline (usually May 15th) to avoid penalties or having your LLC fall out of good standing, which could affect your liability protection.

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