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utah85
New Member

Able to file for 2023?

 I started a thrift store business online and out of my home in 2023. I sourced all year and have expenses from the whole year. I didn't register my LLC with the state until December but didn't register for my EIN until 2024. Do I still file taxes for 2023? If not, are all those expenses gone? 

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1 Reply
DavidD66
Expert Alumni

Able to file for 2023?

The important date is the date your business actually started.  If you began selling goods in 2023, your expenses are deductible in 2023.  If you did not actually being doing business until 2024, then your expenses will (probably) be deductible in 2024.  Prior to actually beginning business operations (selling products) your expenses are start-up costs, and inventory purchases. You are allowed a deduction, in the tax year your trade or business becomes active of the lesser of the amount of the startup expenses or $5,000. However, if the total startup costs are greater than $50,000, the $5,000 deduction is reduced dollar for dollar for any amount of startup expenses over $50,000, until the $5,000 goes to zero. In other words, if startup expenses are greater than $55,000, there is no immediate expensing of any of the startup costs.  

 

When you say you "sourced" I am assuming that means purchasing/obtaining inventory to sell.  You will expense your inventory in the year you sell it.  

 

The creation (registration) of an LLC does not affect how you are taxed (unless you choose S-Corp status).  If you are a single member LLC, the IRS considers you a "Disregarded Entity" for tax purposes and are treated as Self-Employed.  You file your business income and expenses on Schedule C as a part of your personal tax return, whether you are an LLC or not.  Similarly, having an EIN doesn't determine whether or not you need to file Schedule C.    

 

For more information on Start-Up costs, see this IRS Tax Tip:  Here’s how businesses can deduct startup costs from their federal taxes

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