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New Member

I started an LLC in 2016 but didn't earn income

Do I need to put on my tax returns?
1 Reply
New Member

I started an LLC in 2016 but didn't earn income

You will need to file a return for the LLC this year.  When you get a taxpayer identification number (TIN or EIN), the IRS adds the business to their system and will look for a tax return to be filed for that EIN.  If one is not filed, you may be subject to notices and failure to file penalties.

The way that your LLC will file its return will depend on its structure.  

  • If there is one owner, then the LLC's return will be filed on Schedule C (Self-employed profits and losses) as a part of your personal income tax returns (Form 1040).  
  • If there is more than one owner of the LLC, then the default taxable entity is a partnership, and you are required to file Form 1065 for the LLC.  If a 1065 is required, K-1 forms will be generated to report the pass-through income on your personal returns.

Note:  There is an election available for a LLC to be treated, for tax purposes only, as a C corporation or a subchapter-S corporation.

You are only allowed to deduct expenses in the year that you paid them.

You should report the 2016 expenses on the LLC's income tax return even if you do not have income.  Whichever method used by the LLC to file (Schedule C or 1065), the expenses you incurred should be deductible on your personal income tax return and will reduce your income for 2016.
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