I already filed my return for last year based on my W-2 income, but I started a small business last year that didn't have any sales. Do I need to file for the business?

[cxp439]

I am the sole member of my LLC, which didn't have sales in 2016, but I'm not sure if I need to file anyway or how to do that.

[PeterM · Accepted solution]

If there were no revenues and no expenses earned or paid for, then there is no need to file a return. However, if you had expenses but no revenues...you would want to file the return to claim a loss.

Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized.

Start-up costs include any amounts paid or incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business. Organizational costs include the costs of creating a corporation or partnership.

How to make the election.   You elect to deduct the start-up or organizational costs by claiming the deduction on your income tax return (filed by the due date including extensions) for the tax year in which the active trade or business begins. For costs paid or incurred after September 8, 2008, you are not required to attach a statement to your return to elect to deduct such costs.