That's a bit misleading. I have been a tax preparer for several years and IRS agents tell you that you have to declare some sort of income in order to declare business expenses on a Schedule C. Different business structures have different tax filing requirements.
Regarding how to file business taxes with no income, you shouldn’t file if:
- You weren’t actively engaged in a trade or business.
- You were preparing to begin your business.
You can either deduct or amortize start-up expenses once your business begins rather than filing business taxes with no income. Filing at a loss every year just to save on taxes makes you look bad to lenders when trying to qualify for a business loan as most people found out with applying for PPP and EIDL Loans. No Income. No business. You haven't established your proof of concept yet.
A good tax preparer (with an accounting, finance, or business background) would help give you advisement on business operations to help make better decisions to that can help you avoid repeated loss reporting and set up your tax structure to minimize tax liability.
Different Business structures get tax different ways:
- Sole proprietorship; (no Income, no expense)- no filing. (no income, but expenses)- Maybe file
- Partnership; (no income, No expenses) Don't have to file. (No income, but expenses) -File
- Corporation (C Corp and S Corp) ; you have to file whether you profit or have a loss.
If your attempt to go into business is unsuccessful. If you are an individual and your attempt to go into business is not successful, the expenses you had in trying to establish yourself in business fall into two categories.
- Personal Expenses (not deductible) - any costs incurred during a general search for, or preliminary investigation of, a business or investment possibility.
- Capital Expenses (deductible) - the costs you had in your attempt to acquire or begin a specific business
For further research
All about the Schedule C- https://www.irs.gov/publications/p334#en_US_2021_publink[phone number removed]
All about Business Expenses - https://www.irs.gov/pub/irs-pdf/p535.pdf
