Whether you’re legally required to file business taxes with no income depends on how your LLC is taxed. LLCs have the unique ability to be taxed in many ways, and each taxation status has a set of rules for business tax filings. It’s important to file taxes for an LLC with expenses and no income.
Filing Requirements for Different LLC Classifications
- Sole Proprietorship / Single-Member LLC (SMLLC): Attach Schedule C, Profit or Loss From Business, to the personal federal tax return.
- Partnership: Use Form 1065, U.S. Return of Partnership Income. Must be filed annually by the 15th day of the fourth month after the end of the tax year.
- C-Corporation: File Form 1120, U.S. Corporation Income Tax Return, whether or not the LLC has income.
- S-Corporation: File Form 1120-S annually, regardless of business activity.
Tax Write-Offs and Deductions
Can you write off expenses at LLC with no income?
- Startup Costs: Deduct or amortize start-up expenses once your business begins.
- Tax Deductions Guide: The IRS allows various business expenses to be deducted, including:
- Startup costs
- Home office expenses
- Business and health insurance premiums
- Vehicle expenses
- Deduction Limitations: If your startup costs total $50,000 or less, you can deduct up to $5,000 for startup organizational costs.
- Deprecation: Write off the loss in value over time for long-term business assets like machinery.
- Professional Services: Fees paid to attorneys and consultants are deductible.
Specific Situations and Clarifications
- LLCs taxed as sole proprietorships or partnerships are not required to file federal tax returns with no activity unless they have deductible expenses or received any income.
- Small businesses can write off a range of business expenses including car expenses, office supplies, and professional services fees.
- Single-member LLCs are treated as sole proprietorships and report profits or losses on Schedule C, submitted with the 1040 tax return.
- If your LLC is a partnership and has no income or deductible expenses, it generally does not need to file a tax return.
Example Scenario
Here are the details on the LLC: The LLC is a 2-member partnership formed in Texas last year. The total amount for the LLC’s expenses that I could file (expenses with receipts) is less than or equal to $1000. TurboTax has an entry form for Schedule K-1 form 1065, which I did.
Can you have an LLC that doesn’t make money? Yes, but filing requirements will depend on the LLC’s tax classification. LLCs that have become inactive or have no income may still be mandated to file a federal income tax return.