@joshblackford wrote:
Ok makes sense. My LLC was formed in Arizona on Oct. 16, 2023. Am I able to pick the start date or do I have to stay with the formation date? I was reading something about how you can file your LLC with AZ but choose to delay the formation date. I didn't do that because I was planning to start business in 2023 but life happens. My business just went live this year.
Be aware that LLCs are creations of state law, and the IRS does not specifically recognize their existence. Instead, you will file based on the kind of business it is (sole proprietorship or partnership, depending on how many members in the LLC). As such, the IRS wants to see a business tax return for an ongoing trade or business, regardless of what you told the state when you registered.
Also note, this is different than choosing a different financial year for the business. If you want to do that, see a CPA before you do anything else. Your business financial year will run from Jan 1-Dec 31, regardless of what you told the state your start date would be or what your start date actually is.
If you are engaged in ongoing business activities (soliciting clients, doing work) then you file a tax return even if you have not been paid by your clients yet. (In most cases, you would file a schedule C with your personal 1040 for a single member LLC or a form 1065 partnership return for a multi-member LLC.)
However, if you are not engaged in ongoing business activities, then you don't file a business return. Save your startup expenses and report them the first year that you have ongoing business activities to report. Assets are listed for depreciation in the usual way. Other startup expenses may be deducted in the first year if they are less than $5000. If they are over $5000, they can be partly deducted in the first year and partly spread out over 15 years, according to a formula that Turbotax will calculate for you.
