Deducting core 'maintenance' expenses in years without activity

[ross2022]

Hello,

I have had a profitable LLC consulting business for a number of years, and mid-2018 converted to a full-time employee of a corporation. I have maintained my business registration and status throughout, expecting that in future years I will generate additional income. Relating to 2020 (and 2019), I had no income, however I had the following small business expenses to keep the business 'available':

- Data Backup for business records

- Business Annual Registration

- Costco Business Credit Card fee

- Web hosting for my business e-mail/web domain

- PO Box for my business address

- Bank Account Fees

Is it acceptable to deduct these business expenses that are kept to maintain the business, even if I am not actively generating revenue? I also want to be cautious of increasing my audit risk, and if that is likely, it is not worth the additional $500 in deductions.

Thanks in advance!

[tagteam]

You can certainly deduct ordinary and necessary business expenses regardless of whether or not your business was profitable (provided you were actually open for business).

Net losses, however, generally increase audit risks, at least slightly, but that is not cause for concern as long as the deductions are legitimate and can be substantiated.

[ross2022]

Thank you for your response, tag team. I'm not sure how I demonstrate 'open for business', given I am a service. I'm not out recruiting consulting work, by any means. However, if contacted, I would consider it. Does that help clarify?

[tagteam]

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@ross2022 wrote:

....if contacted, I would consider it. 

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Then it appears as if you are still "open".