LLC Tax Filing Types
An LLC files taxes based on its structure. Single member LLCs default as sole proprietors. Income and expenses directly pass to owners. Multiple member LLCs default as partnerships. They pass income and deductions to partners and IRS via Form 1065 annually. LLCs taxed as corporations file returns regardless of income. C-corps use Form 1120. S-corps use Form 1120S. Both entity types pass income to shareholders.
Benefits of Filing Taxes for No-Income LLCs
Whether mandated or not filing taxes for no income LLCs has benefits. It establishes deduction history. It maintains compliance if claiming tax exempt status. And it keeps LLC in good standing with state.
LLCs with No Income but Expenses
Having an LLC with no income but expenses is common and normal for many businesses, especially during their early stages of operation. As long as members understand their legal and financial responsibilities and obligations there is no issue with having expenses but no income as an LLC.