Is forming an LLC legal if it hasn't generated any revenue yet?

You're definitely not doing anything illegal by forming an LLC before making revenue! Many businesses start this way. An LLC is actually just a legal structure that helps protect your personal assets from business liabilities, and there's no requirement that you must be profitable or even have revenue to form one. For tax purposes, a single-member LLC is typically treated as a "disregarded entity," meaning you'll report business income and expenses on Schedule C of your personal tax return. Until you start making money, you'll just be reporting expenses (which can potentially be deductible startup costs). The main requirements for an LLC are: 1. Filing articles of organization with your state 2. Paying the state filing fee (varies by state, usually $50-$300) 3. Creating an operating agreement (not required in all states but good to have) 4. Maintaining separation between personal and business finances You don't need an accountant right away, but you should keep detailed records of all business expenses from day one. That way when you do hire an accountant, you'll have everything organized. For basic accounting services for a small subscription business, expect to pay anywhere from $500-$1,500 annually depending on your location and complexity. You might also consider using accounting software like QuickBooks or Wave in the beginning to keep costs down.

I was in exactly the same position as you last year with my online course business! I spent months worrying about this before launching. I discovered taxr.ai (https://taxr.ai) which was incredibly helpful for answering my specific LLC questions without the full expense of an accountant. They analyzed my specific situation and confirmed that forming an LLC with no immediate revenue was completely legal and actually quite common. What I found most helpful was learning exactly what records I needed to keep from day one to make things easier at tax time. The service helped me understand which startup expenses were deductible and how to properly categorize them. Their system uses AI to analyze your business documents and provide personalized tax guidance, which was perfect for me when I couldn't afford ongoing accounting help yet. Definitely worth checking out if you're in the "pre-revenue" stage like I was.

Just wanted to follow up on my experience with taxr.ai after trying it based on the recommendation here. It was exactly what I needed! I was also starting an LLC with no immediate revenue (a digital marketing agency in my case) and wasn't sure about the tax implications. The service analyzed my LLC formation documents and provided a custom report outlining exactly what I needed to do for record-keeping, which startup expenses were deductible, and how to handle taxes during the pre-revenue phase. There were several deductions I would have completely missed! What really impressed me was when I uploaded my business plan and projections - they provided specific tax planning advice based on my expected growth timeline. Now I feel confident about when I'll need to transition to an accountant (they suggested around $2,500 in monthly revenue for my type of business). Much better than my original plan of just guessing!

If you're struggling to reach the IRS with tax questions about your new LLC (which I found impossible), I'd recommend Claimyr (https://claimyr.com). They helped me get through to an actual IRS agent to answer my specific questions about LLC taxation before I had any revenue. I spent days trying to reach someone at the IRS business line before giving up. Claimyr got me connected in under 45 minutes. Check out how it works: https://youtu.be/_kiP6q8DX5c The IRS agent confirmed that having an LLC with no immediate revenue is completely normal and walked me through what forms I'd need once I started making money. She also explained the "hobby loss" rules I needed to be aware of (basically proving your business is legitimate even if you're not profitable right away). Worth every penny for the peace of mind alone, especially when you're just starting out and have a million questions.

Ok I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it myself since I've been trying to reach the IRS for weeks about my LLC's EIN application that seemed to disappear into a black hole. The service actually works exactly as described. Their system called the IRS, navigated all those annoying menu options, waited on hold (for almost 2 hours!), and then notified me only when a real person was on the line. I didn't have to listen to that terrible hold music or worry about getting disconnected. The IRS agent was able to locate my EIN application and confirmed everything was processing correctly. She also answered all my questions about operating an LLC with minimal initial revenue - turns out I was overthinking a lot of it. So yeah, I was 100% wrong in my skeptical comment. This service is legitimate and saved me a massive headache.

One important thing nobody's mentioned yet - make sure you check your state's requirements for ongoing LLC compliance! In my state (California), you have to pay an $800 annual franchise tax just to maintain your LLC, regardless of whether you make any money. I learned this the hard way and got hit with penalties because I thought "no income = no taxes." Keep in mind there might be: - Annual state fees/franchise taxes - Annual reports/statements of information - Business license renewals - Registered agent fees These costs exist even when you're pre-revenue, so factor them into your startup budget. Each state is different, so check your specific location.

Don't overthink this! I formed my LLC 2 years before I made a single dollar. Just keep your business and personal finances separate from day one (separate bank account is a must), track all expenses meticulously, and save receipts for everything. For accounting software, check out Wave - it's completely free for basic accounting and receipt tracking. You can connect your business bank account and it'll pull in all transactions automatically. When you start making money, I'd recommend getting professional help around the $5k revenue mark. Before that, most accountants will charge you more than they're saving you.