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lplasket
New Member

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

I have already filed my personal taxes. How do I file for my business? I do not see this info on the site.
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Accepted Solutions
Critter-3
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

Define the "business"  ... which one is it ?  And did you have expenses r income  in 2018 & 2019?

 

Sole Proprietorship – This is a business with one owner, and only own owner. There are no other investors or share holders. This type of business is considered a “disregarded entity” by the IRS. All income and expenses for the business are reported  on SCH C as a physical part of the owner’s personal tax return. Again, a sole proprietorship has only own owner. Depending on what state the business is in, registration is not required at the state level. But it may be required at the county, town, or other level of government below the state. For example, your county may require you to register and obtain a county issued Occupational License, which authorizes you to conduct business only within the jurisdiction of the authority that issued the Occupational License. This is most often required when the county, city or other authority below the state taxes personal income or imposes a tangible property tax on business assets utilized to produce business income.

Single Member LLC - This is a business with one owner, and only own owner. There are no other investors or share holders. This type of business is considered a “disregarded entity” by the IRS. All income and expenses for the business are reported  on SCH C as a physical part of the owner’s personal tax return. Again, a single member LLC has only own owner. This type of business is required to be registered at the state level, weather that state taxes personal income or not.  Additionally, this type of business may also be required to obtain an Occupational License for the county(s), city(s) or other more localized jurisdictions within that state, in which the business will be operating in.

Multi-Member LLC – This is a business with more than one owner.  It’s also the exact same as a Partnership (for tax purposes) This type of business also has to register at the state level, and may also be required to obtain an Occupational License from more localized jurisdictions within the state, in which that business will operate.  This type of business will file its own physically separate tax return with the IRS (and state if applicable) referred to as a Partnership Return, on IRS Form 1065. When completing the 1065 (using TurboTax) the business will issue each individual owner a K-1 reporting the income (or loss) of each owner. Each owner will use this K-1 to complete their personal return. So an owner can’t even start their personal return, until after the 1065 Partnership Return has been complete, filed, and all K-1’s issued to all owners.

LLC “Like an S-Corp” – For tax purposes only (and I reiterate: FOR TAX PURPOSES ONLY!!!!!) one can elect to have the IRS treat their single member LLC or multi-member LLC “like an S-Corp” ****FOR TAX PURPOSES ONLY!!!!!****  This means your business is treated like and considered to be a physically separate taxable entity. This is accomplished by filing IRS Form 8332 – Entity Classification Election. This allows you to act as if your single member LLC or multi-member LLC is an S-Corp. But understand that if you want the IRS to treat your LLC like an S-Corp, then the business “must” act like an S-Corp, and follow all the laws, rules and regulations required of an S-Corp by whichever state your LLC is registered in. All business income and expenses is reported on IRS Form 1120-S – Income Tax Return For An S-Corporation. The S-Corp will then issue each owner, investor and/or shareholder a K-1 which they will need before they can even start their personal tax return.  Unlike a single member LLC which is considered a disregarded entity for tax purposes, an LLC that has filed form 8332 – Entity Classification Election  “is” considered and treated like a separately taxable entity.

S-Corp – This type of business is registered at the state level and must conform to the laws, rules, regulations and ordinances of that state which apply to an S-Corp. All business income and expenses is reported on IRS Form 1120-S – Income Tax Return For An S-Corp.  The S-Corp will then issue each owner, investor and/or shareholder a K-1 which they will need before they can even start their personal tax return.  Unlike an LLC which is considered a disregarded entity for tax purposes, an S-Corp  “is” a separately taxable entity, and therefore files its own physically separate tax return and issues K-1’s to all owners, officers, investors and shareholders.

C-Corp - This type of business is registered at the state level and must conform to the laws, rules, regulations and ordinances of that state which apply to a C-Corp. All business income and expenses is reported on IRS Form 1120 – Income Tax Return For A C-Corp.  The C-Corp will then issue each owner, investor and/or shareholder a K-1 which they will need before they can even start their personal tax return.  A C-Corp  “is” a separately taxable entity, and therefore files its own physically separate tax return and issues K-1’s to all owners, officers, investors and shareholders.

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Hal_Al
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

You said "I have already filed my personal taxes" for 2019.

 

You can NOT now file a separate 2019 Schedule C. It had to be included with your 2019 personal form 1040.

So, that now means you have to file an amended personal tax return (form 1040X) to add/attach Schedule C.

Prior to 2020, amended returns could only be paper mailed. The IRS now allows efiling, see https://ttlc.intuit.com/community/amending/help/can-i-e-file-my-1040x-to-amend-my-return/00/26008

 

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Rick19744
Level 11

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

It is clear from reading this post that you need to meet with a tax professional where you can have a one on one and discuss your business.

This would entail talking about what occurred since you started your business, should you have filed in previous years, understand what needs to be done currently and how to move forward.

This is not an area where you want to be penny wise and pound foolish.

*A reminder that posts in a forum such as this do not constitute tax advice.*

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7 Replies
Critter-3
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

Define the "business"  ... which one is it ?  And did you have expenses r income  in 2018 & 2019?

 

Sole Proprietorship – This is a business with one owner, and only own owner. There are no other investors or share holders. This type of business is considered a “disregarded entity” by the IRS. All income and expenses for the business are reported  on SCH C as a physical part of the owner’s personal tax return. Again, a sole proprietorship has only own owner. Depending on what state the business is in, registration is not required at the state level. But it may be required at the county, town, or other level of government below the state. For example, your county may require you to register and obtain a county issued Occupational License, which authorizes you to conduct business only within the jurisdiction of the authority that issued the Occupational License. This is most often required when the county, city or other authority below the state taxes personal income or imposes a tangible property tax on business assets utilized to produce business income.

Single Member LLC - This is a business with one owner, and only own owner. There are no other investors or share holders. This type of business is considered a “disregarded entity” by the IRS. All income and expenses for the business are reported  on SCH C as a physical part of the owner’s personal tax return. Again, a single member LLC has only own owner. This type of business is required to be registered at the state level, weather that state taxes personal income or not.  Additionally, this type of business may also be required to obtain an Occupational License for the county(s), city(s) or other more localized jurisdictions within that state, in which the business will be operating in.

Multi-Member LLC – This is a business with more than one owner.  It’s also the exact same as a Partnership (for tax purposes) This type of business also has to register at the state level, and may also be required to obtain an Occupational License from more localized jurisdictions within the state, in which that business will operate.  This type of business will file its own physically separate tax return with the IRS (and state if applicable) referred to as a Partnership Return, on IRS Form 1065. When completing the 1065 (using TurboTax) the business will issue each individual owner a K-1 reporting the income (or loss) of each owner. Each owner will use this K-1 to complete their personal return. So an owner can’t even start their personal return, until after the 1065 Partnership Return has been complete, filed, and all K-1’s issued to all owners.

LLC “Like an S-Corp” – For tax purposes only (and I reiterate: FOR TAX PURPOSES ONLY!!!!!) one can elect to have the IRS treat their single member LLC or multi-member LLC “like an S-Corp” ****FOR TAX PURPOSES ONLY!!!!!****  This means your business is treated like and considered to be a physically separate taxable entity. This is accomplished by filing IRS Form 8332 – Entity Classification Election. This allows you to act as if your single member LLC or multi-member LLC is an S-Corp. But understand that if you want the IRS to treat your LLC like an S-Corp, then the business “must” act like an S-Corp, and follow all the laws, rules and regulations required of an S-Corp by whichever state your LLC is registered in. All business income and expenses is reported on IRS Form 1120-S – Income Tax Return For An S-Corporation. The S-Corp will then issue each owner, investor and/or shareholder a K-1 which they will need before they can even start their personal tax return.  Unlike a single member LLC which is considered a disregarded entity for tax purposes, an LLC that has filed form 8332 – Entity Classification Election  “is” considered and treated like a separately taxable entity.

S-Corp – This type of business is registered at the state level and must conform to the laws, rules, regulations and ordinances of that state which apply to an S-Corp. All business income and expenses is reported on IRS Form 1120-S – Income Tax Return For An S-Corp.  The S-Corp will then issue each owner, investor and/or shareholder a K-1 which they will need before they can even start their personal tax return.  Unlike an LLC which is considered a disregarded entity for tax purposes, an S-Corp  “is” a separately taxable entity, and therefore files its own physically separate tax return and issues K-1’s to all owners, officers, investors and shareholders.

C-Corp - This type of business is registered at the state level and must conform to the laws, rules, regulations and ordinances of that state which apply to a C-Corp. All business income and expenses is reported on IRS Form 1120 – Income Tax Return For A C-Corp.  The C-Corp will then issue each owner, investor and/or shareholder a K-1 which they will need before they can even start their personal tax return.  A C-Corp  “is” a separately taxable entity, and therefore files its own physically separate tax return and issues K-1’s to all owners, officers, investors and shareholders.

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Hal_Al
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

You cannot add a Sole Proprietorship Schedule C, to your personal tax return,  using TurboTax Deluxe Online. You will have to upgrade to TurboTax Self Employed. 

VolvoGirl
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

And if you need to fill out schedule C you need to amend your personal 1040 return to add it.  So wait until your first return has been fully processed and you get the first refund or paid the  tax due.

 

How to amend a 2019 Online return

https://ttlc.intuit.com/community/amending/help/how-do-i-amend-my-turbotax-online-return/00/27577

 

You will still get the first refund or need to pay the original tax due.  Then the amended return is only for the difference you get back or owe.  In fact you should not even amend until the first return has fully processed and you get the first refund or your tax due payment has cleared.  And make sure the original refund or tax paid shows up on the amended return.  You can confirm this by printing your amendment and looking at the 1040X. Line 18 should be your original refund amount and line 22 should be your additional refund.  If you paid on your original return it will be on line 16.  If there is an amount owed with the amendment, it will be on line 20.

 

 

lplasket
New Member

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

Mine is a Single Member LLC. Basically, I am looking for instructions on "how" to file the 1040 schedule c to claim loss. I've downloaded and completed the form, but I don't know "how" to submit it electronically or if I should just mail it in. This is the very first time doing this for my business. Next year, I will get an accountant to handle. 

Hal_Al
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

You said "I have already filed my personal taxes" for 2019.

 

You can NOT now file a separate 2019 Schedule C. It had to be included with your 2019 personal form 1040.

So, that now means you have to file an amended personal tax return (form 1040X) to add/attach Schedule C.

Prior to 2020, amended returns could only be paper mailed. The IRS now allows efiling, see https://ttlc.intuit.com/community/amending/help/can-i-e-file-my-1040x-to-amend-my-return/00/26008

 

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Carl
Level 15

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

From what I've read in this thread, your business is a single-member LLC. The IRS considers a single member LLC to be a disregarded entity.

I started a business in 2018 and did not begin earning until 2020.

When the business started earning is irrelevant. If the business was "open for business" on or before Dec 31 2018, then you were required to report all of your business income and business expenses as a part of your personal 2018 tax return on SCH C.  Even if the business operated at a loss.

If your business was not open in 2018, but was "open for business" for even one single day in 2019, then you are required to report all business income and business expenses as part of your personal 2019 tax return on SCH C. Again, even if the business operated at a loss.

If you were open in 2018, then you will have to amend your 2018 tax return to include the SCH C. You can not amend a prior year tax return online. You ***MUST*** use the desktop version. With the desktop version of the program you can use TurboTax Premier 2018 or higher.  Assuming you used the online version of TurboTax 2018 to complete and file your 2018 tax return, you will need to log into your online account using he same exact credentials you used to complete your original 2018 return, and download the .tax2018 file. (NOT the PDF file - but do get the PDF file for your records so you have a copy of the "ORIGINALLY" filed 2018 tax return. )

After you download the .tax2018 file, then you need to down the TurboTax Home and Business Amendment software at https://turbotax.intuit.com/personal-taxes/cd-download/amend/ty18/  The other version on that website *WILL* *NOT* *WORK* for you. So don't waste your time. If your state also taxes income,then you will be amending the state return too. So if your .tax2018 file includes a state, you will "NOT" be able to open the .tax2018 file for amending until *AFTER* you download and install the state module.Install the federal amending program first, and then from within the federal program click ONLINE and go from there to get the appropriate state module you need, if any.

Take special note that an amended return can not be efiled. The IRS says so. Therefore, after you finish the amending process, that means *YOU* will have to print it, and *YOU* will have to sign the amende return (both the 1040 and 1040X) and *YOU* will have to mail it to the IRS.

When you print the amended return, it will also print a sheet of instructions for *YOU* to follow. The instructions will include the address where you mail the return to, along with what other documents (if any) that you need to include in the envelope with the amended return.

If the state taxes your income, you'll be amending the state return also. A physically separate sheet of instructions is printed for the state return. The federal return and the state return are each mailed by *YOU* to physically separate addresses. So pay attention to detail.

 

If you need to amend your 2019 return, then log into your online account using the same credentails you used to originally prepare your 2019 tax return. After amending the 2019 tax return, you ***CAN*** e-file the amended 2019 (TWENTY NINETEEN) tax return. You can *NOT* e-file an amended 2018 (TWENTY EIGHTEEN) tax return.

 

 

 

Rick19744
Level 11

I started a business in 2018 and did not begin earning until 2020. I did not file taxes for the business in 2018, 2019. How do I begin?

It is clear from reading this post that you need to meet with a tax professional where you can have a one on one and discuss your business.

This would entail talking about what occurred since you started your business, should you have filed in previous years, understand what needs to be done currently and how to move forward.

This is not an area where you want to be penny wise and pound foolish.

*A reminder that posts in a forum such as this do not constitute tax advice.*

View solution in original post

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