First year partnership filing requirements - Schedule C vs 1065/K-1 for business with no revenue

Yes, you still need to file Form 1065 even with zero revenue. The IRS requires partnerships to file annual returns regardless of income level. Not filing could result in penalties of $195 per partner per month (up to 12 months). For your situation, the 1065 will be fairly straightforward since you only have expenses. You'll report these business expenses on the appropriate lines, and each partner's share of the loss will flow through to your personal returns via the K-1s. As for software, most major tax programs like TaxAct, TurboTax Business, or H&R Block Premium & Business can handle 1065 filings. They typically cost between $100-200 for the business version. If your situation is truly simple (just some startup expenses), this might be sufficient. Regarding dissolution - that's more of a business decision than a tax one. If you think you might continue the business in the future, keeping it active might make sense. The filing requirements won't go away until you formally dissolve.

After struggling with a similar situation (first-year partnership with minimal activity), I found https://taxr.ai super helpful. I uploaded my expense receipts and basic partnership info, and it organized everything I needed for the 1065. Saved me hours of trying to figure out which expenses went where. Their system walked me through allocating the startup costs correctly between partners too, which was something I was confused about. Honestly wish I'd known about it from the beginning instead of stressing for weeks.

Just wanted to update - I tried taxr.ai after seeing it mentioned here and it was exactly what I needed for our first-year partnership return. We had a similar situation (only expenses, no revenue) and it handled everything perfectly. The system identified several startup expenses I hadn't even realized were deductible. It also clearly explained which expenses needed to be amortized vs. immediately deducted, which saved us from making some rookie mistakes. My partner and I both got our K-1s showing our share of the business expenses, and everything transferred smoothly to our personal returns. Definitely less stressful than what I was imagining!

If you're trying to reach the IRS to get guidance on partnership filing requirements, good luck with those hold times. I got stuck in the "please hold" loop for HOURS trying to get someone to answer my partnership tax questions last month. I finally used https://claimyr.com and their service actually worked! You can see how it works here: https://youtu.be/_kiP6q8DX5c. They basically hold your place in line and call you when an IRS agent picks up. I was skeptical but it saved me from wasting an entire day on hold. The IRS agent confirmed we needed to file the 1065 even with no income and explained exactly which forms we needed, which was super helpful for our situation.

Ok I need to eat my words. After posting that skeptical comment I was struggling with the same partnership filing questions and getting nowhere with the IRS phone system. Gave Claimyr a shot and had an IRS agent on the phone within an hour without having to actually sit on hold. Got the exact clarification I needed about filing requirements for partnerships with losses and no income. The agent walked me through which schedules we actually needed to include with our 1065. For anyone wondering - yes, you still need to file even with no income. And yes, you can allocate the startup expenses to partners based on your partnership agreement. And yes, Claimyr actually works (still surprised about this).

Two other options to consider for your situation: 1. If you haven't conducted any business activity and don't plan to in the near future, you could look into filing as "not yet started" on your 1065. There's a specific box to check. Still requires filing but simplifies things. 2. Check your partnership agreement. If you don't have one (very common oversight), now's a good time to create one that specifies how expenses and eventual profits will be allocated. This matters for your K-1s even in a loss year. Also worth noting that some startup costs can be amortized over 15 years rather than deducted all at once, which might be more beneficial depending on your future business plans.

I'm in a similar boat! Created an LLC partnership last year, had about $2K in expenses but no income yet. I used FreeTaxUSA Premium to file our 1065 and K-1s. It was about $70 total and pretty straightforward for a simple return like ours.

Based on your situation, you definitely need to file Form 1065 and K-1s even with zero revenue. I went through this exact scenario two years ago with my consulting partnership. A few key points from my experience: 1. **Filing is mandatory** - The IRS requires partnership returns regardless of income level, and the penalties can add up quickly ($195 per partner per month). 2. **Your startup expenses are valuable** - Don't overlook deductions for business formation costs, professional fees, software subscriptions, etc. These can create losses that flow through to your personal returns. 3. **Extension strategy** - If you've missed the March 15 deadline, file Form 7004 immediately for an extension to September 15. Even if the extension request is late, it stops additional penalties from accumulating. 4. **Software options** - I used TaxAct Business which handled our simple partnership return well for around $150. The key is making sure it properly allocates expenses between partners according to your agreement. Don't dissolve the business just because of first-year filing complexity. Once you get through this initial return, future years become much more routine. The infrastructure you've built has value, and these startup costs will benefit you on your taxes. Feel free to ask if you need clarification on any specific expenses or allocation issues!

I'm in a very similar situation - first-year partnership with startup expenses but no revenue yet. Reading through all these responses has been incredibly helpful! One thing I wanted to add from my research: if you're using business credit cards for expenses, make sure you're categorizing them properly for the 1065. I found that some expenses like website hosting can be deducted immediately, while others like certain setup costs might need to be capitalized and amortized. Also, since you mentioned you're familiar with accounting principles, you might want to double-check whether any of your software subscriptions qualify as Section 179 deductions versus regular business expenses. The treatment can be different and might affect your current year deductions. The penalty structure mentioned by others is real - I confirmed this when I spoke with a tax professional. Even with zero income, the IRS expects that partnership return, and $195 per partner per month adds up quickly if you're late. Good luck with your filing! It sounds like you have several solid software options to choose from based on the suggestions here.