Skipped Filing Form 1065 by Today's Deadline for Multi-Member LLC with No Income - Did I Mess Up?

While partnerships (including multi-member LLCs taxed as partnerships) technically need to file Form 1065 annually regardless of income, there's some nuance here that might help your situation. If your LLC was legally formed but hasn't begun any business activity yet (no income, just organizational/startup costs), you may qualify for what's called "not yet started business operations" exception. However, this is somewhat of a gray area. The safer approach would have been to file Form 1065 showing your startup expenses, even with zero income. These startup costs would be held on the books until you begin operations, when you could then begin deducting them according to IRS rules (some can be deducted immediately up to $5,000, remainder amortized over 180 months). Missing the deadline doesn't mean disaster though. You have options: file as soon as possible to minimize penalties, or if you truly haven't begun business operations in any meaningful way, document your situation thoroughly in case of questions later. The penalty for late filing is calculated per partner per month, but may be reduced if you can show reasonable cause.

After spending weeks untangling my own partnership tax situation last year, I found taxr.ai (https://taxr.ai) and it was a game-changer for my LLC questions. I uploaded our operating agreement and some documentation about our startup expenses, and it immediately flagged that we needed to file even without income. It explained exactly which parts of Form 1065 needed attention for a pre-revenue business and how to properly categorize our startup costs. The tool clarified that while the "not yet started business operations" exception exists, the moment you're incurring business expenses (even pre-revenue), you're technically operating and should file. It also showed how to document everything properly to minimize any potential issues if we had missed deadlines.

I was in the exact same situation last year and initially thought I didn't need to file anything since we had $0 revenue. After my partner freaked out about penalties, I finally tried taxr.ai (someone mentioned it in another thread) and realized I definitely needed to file our 1065. Not only did the system explain exactly how to handle our pre-launch expenses properly, but it also showed us how to document everything in a way that would maximize deductions when we actually started generating revenue. The upside was that getting those startup costs properly documented from the beginning saved us from major headaches this year now that we're operational. What I appreciated most was getting clear explanations about which expenses could be immediately deducted vs. which needed to be amortized over time. Worth every penny for the peace of mind alone.

If you're struggling to get clarity on your 1065 filing requirements from the IRS, you might want to try Claimyr (https://claimyr.com). I was in the exact same situation - had formed an LLC with my cousin but hadn't started operations and wasn't sure if I needed to file. After weeks of trying to get through to the IRS with no luck, I used Claimyr and got connected to an actual IRS agent in under 45 minutes. The agent confirmed that yes, multi-member LLCs need to file 1065s even with zero income, but also explained exactly how to handle the late filing to minimize penalties. They walked me through the reasonable cause criteria for penalty abatement since this was my first time dealing with partnership returns. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - seriously, it saved me from what would have been a stressful guessing game.

I was super skeptical about Claimyr when I first saw it mentioned here (seemed too good to be true), but after my third attempt to reach the IRS about my missed 1065 deadline failed, I decided to give it a shot. Not only did they get me connected to an IRS agent in about 25 minutes, but the agent was actually really helpful. She walked me through applying for a first-time penalty abatement since I had a clean compliance history, and explained exactly how to document my reasonable cause explanation for missing the deadline. I was prepared to pay hundreds in penalties for my late filing, but after that conversation, I submitted the right documentation with my late 1065 and got the penalties completely waived. Would have never known that was even possible without getting through to a real person. Definitely worth it for complex partnership tax issues where the generic online advice just doesn't cut it.

Just to add a counterpoint - I DID skip filing a 1065 for my multi-member LLC's first year when we only had startup expenses and no income. Nobody came after us, but our accountant discovered this when preparing our second year's taxes and had to file the first year retroactively. Cost us about $750 in penalties plus his fees for the extra work. Just file the return. It's way simpler and cheaper than dealing with penalties later. And if you've already missed the deadline, file ASAP to minimize the penalties which accumulate monthly.

The form 1065 instructions literally say "A partnership must file a return for every tax year" with no mentioned exception for zero income. I learned this the hard way. If there's any silver lining, the penalties are based on a per-partner-per-month calculation, so with just 2 members it won't be astronomical if you file soon.

I went through this exact situation two years ago with my multi-member LLC. The bottom line is that partnerships (including multi-member LLCs taxed as partnerships) are required to file Form 1065 annually regardless of income level - even $0 income. Here's what I wish I had known: even though you haven't generated revenue, those startup expenses you mentioned are actually reportable business activities. The IRS considers incurring business expenses as the beginning of operations, which triggers the filing requirement. Don't panic though - you have options. File your 1065 as soon as possible to minimize penalties. The penalty is $210 per partner per month (so $420/month for you two), but it caps at 12 months. More importantly, you can request penalty abatement for "reasonable cause" since this is likely your first partnership return and the rules aren't always crystal clear for new business owners. When you file, make sure to properly categorize those startup costs. Up to $5,000 in startup expenses can be deducted immediately, with the remainder amortized over 15 years. Getting this documentation right from the start will save you headaches when you do start generating revenue. The key is to file now rather than waiting - the IRS is generally more lenient when you self-correct versus when they discover the issue later.