A business loss occurs when your business spends more than it earns. You can use this net operating loss to claim tax refunds for past or future tax years. As an LLC owner, you can deduct losses on your personal tax return. The IRS allows you to claim losses for three out of five tax years.
If your C corporation makes a loss, you may claim tax relief. Trading losses can be carried back one year without restriction. Other losses can be carried forward indefinitely. Your loss deduction will offset some taxes.
The IRS may still require a tax return when your business makes no money. Even if you owe nothing, there may be financial benefits to filing.
Avoid falsifying deductions, as that is illegal. Consecutive losses can also trigger an IRS audit. However, losses can provide tax advantages if claimed properly.