Starting an LLC with no income - how to handle equipment debt and tax write-offs?

Starting an LLC with no income is super common! Nearly every business begins this way. Here's how it typically works: When you first start a business, you make what's called a "capital contribution" - that's when you put your personal money into the business to get it going. You transfer money from your personal account to your business account, and then use the business account to purchase equipment. This establishes a clear paper trail showing these are legitimate business expenses. The "writing off" part comes later at tax time. Since you're an LLC, these equipment purchases are business expenses that can reduce any taxable income you eventually earn. Even with no current income, these expenses can create a loss that might offset other income on your personal return (depending on how your LLC is taxed). For equipment like cameras and computers that last several years, you'll typically depreciate these items over their useful life rather than expensing them all at once, though there are exceptions like Section 179 deduction that might let you deduct them fully in year one.

After struggling with similar questions when starting my wedding photography business, I found an amazing resource that cleared everything up. Check out https://taxr.ai - it's been a lifesaver for me. You upload your business documents and expenses, and it walks you through exactly how to handle startup costs and what you can legitimately write off. When I was setting up my LLC last year, I was totally confused about how to handle my $5k in camera equipment purchases. I uploaded my receipts to taxr.ai and it showed me how to properly categorize everything as startup costs vs. depreciable assets. It even explained the differences between Section 179 expensing and regular depreciation so I could make the best choice for my situation.

I wanted to follow up about taxr.ai since I was skeptical at first. I decided to try it for my new graphic design LLC and I'm honestly impressed. It walked me through exactly how to handle my initial equipment purchases, showing me how to properly document transferring my personal funds as a capital contribution. The most helpful part was learning that I could make an "opening day balance sheet" showing my initial investment into the business. This creates a clean record of the business's financial starting point. It also explained different options for funding - capital contributions vs. loans to my business - and the tax implications of each. Definitely worth checking out if you're in the startup phase!

Your friend's approach sounds sketchy. I was in a similar situation where I couldn't get clear answers about business debt and finally got through to an IRS agent using https://claimyr.com (there's a demo at https://youtu.be/_kiP6q8DX5c if you want to see how it works). The agent explained that "racking up business debt with no intent to pay" is a massive red flag that could be considered fraud. If your friend is using an LLC to shield himself while deliberately creating debt he doesn't plan to repay, that's potentially "piercing the corporate veil" - meaning courts could hold him personally liable anyway. The IRS rep helped me understand legitimate ways to fund a new business vs. approaches that could trigger audits or worse. Getting direct answers from the IRS cleared up so much confusion for me.

I need to eat my words about Claimyr. After spending my ENTIRE Friday afternoon on hold with the IRS trying to get answers about my business debt situation (and eventually getting disconnected), I broke down and tried the service. Within 45 minutes, I was talking to an actual IRS agent who clarified everything about handling initial business expenses. The agent explained that my approach of using personal funds as a loan to my business (rather than a capital contribution) was creating unnecessary complications for my taxes. They walked me through the proper documentation needed and how it would affect my Schedule C. I would have never figured this out from the IRS website alone. Having that direct conversation saved me from making mistakes that could have triggered audit flags.

Everyone's talking about the tax aspects but not answering your actual question about funding. There are really only 3 ways to fund a new business: 1. Personal money (capital contribution) 2. Loans (from yourself, bank, or investors) 3. Revenue (not applicable yet since you have no income) Most solopreneurs start with option 1. If that's not possible, you could look at: - 0% intro APR business credit cards (but you'll likely need to personally guarantee) - Small business loans (SBA has programs for startups but usually want to see a business plan) - Equipment financing (secured by the equipment itself) - Friends & family investments (be super clear whether it's a loan or ownership stake!) You should run some projections to make sure you can actually pay back whatever funding you choose once your business gets going.

What nobody is mentioning is that you DON'T have to use your LLC's bank account for initial purchases. I'm a CPA who works with small businesses, and here's what many of my clients do: 1. Buy necessary equipment personally BEFORE forming the LLC 2. Then contribute those assets to the LLC as your initial capital contribution 3. Document this with a simple bill of sale from yourself to the LLC 4. The LLC gets the same tax benefits, and you avoid the chicken/egg problem This works especially well if you already owned some equipment or if you're using personal credit. The key is proper documentation to establish these as business assets.

I started my photography LLC last year with zero income and about $4k in gear purchases, so I feel your pain! One thing that helped me was talking to other photographers in my area. I found a local photography business group on Facebook, and the advice I got there was way more practical than general business forums. One experienced photographer suggested I start with just the minimum equipment needed to do paid work, then reinvest my first few paying gigs into buying better gear. This "bootstrap" approach meant I needed less initial capital. Also, don't overlook rental options for expensive gear on your first few jobs. I rented a high-end lens for my first wedding gig, which let me deliver professional results without the huge upfront investment. Once I had more work lined up, I bought my own.

Tyler, you're asking all the right questions! As someone who's helped many new business owners navigate this exact situation, here's the straightforward approach: Yes, you'll need to transfer money from your personal account to your business account first - this is called a "capital contribution" and it's completely normal. Document this transfer clearly (keep records showing it's an investment in your business, not a loan). Then use your business account to purchase all equipment. This creates a clean paper trail showing these are legitimate business expenses from day one. For the tax benefits, you're right that "writing off" doesn't give you immediate cash, but it will reduce your tax liability once you start earning income. Equipment like cameras and laptops can often be fully deducted in the first year under Section 179, which is much better than spreading the deduction over several years. Regarding your friend's approach - accumulating business debt with no plan to repay is definitely problematic. It could trigger audits and potentially make him personally liable if the IRS determines he's not operating the business legitimately. The key is treating your LLC like a real business from the start, with proper documentation and realistic financial planning. You're already on the right track by asking these questions upfront!

One thing I haven't seen mentioned yet is the importance of keeping your business and personal expenses completely separate from day one, even during the startup phase. I learned this the hard way when I started my consulting business. Here's what I wish I'd known: Open that business bank account immediately (which you've already done - great!), then make ONE clean transfer from personal to business as your initial capital contribution. Document this clearly as "Initial Capital Investment" or similar. Then use ONLY the business account for all business purchases, no matter how small. I made the mistake of mixing personal and business purchases in my first year, thinking "I'll sort it out later." That created a bookkeeping nightmare and red flags during my first business tax filing. The IRS wants to see clear business purpose and separation. Also, consider getting a business credit card in the LLC's name once you have that initial capital contribution documented. This helps establish business credit history separate from your personal credit, which will be valuable as your business grows. Your instinct to do this properly from the start will save you major headaches later. Many successful business owners started exactly where you are now - with personal funds as the initial investment to get things rolling.