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Level 1

Tax carryover for LLC


I'm planing on starting an LLC, but since it is already near the end of the year going into September, I wanted to know if there is anything like carrying over business losses from the first year into the next? Commonly business expenses are greater at the start. Essentially I would like to know if the business does better the second year, but doesn't cover the losses from the first, will I still have a tax bill at the end of the business's second year? Knowing this would greatly ease my mind!


Thank you!

1 Reply
Employee Tax Expert

Tax carryover for LLC



As a single member LLC you would report your income and expenses on a schedule C (self employed income and expenses). Being a cash basis taxpayer you would need to report your income when you receive it and expenses when you paid them. Since you have expenses but no income you would take the full loss this year.


A few thing that might help spread the expenses out are your expenses for start up cost, you can amortize them over 15 years and take some each year or expense up to $5,000 and amortize the rest over 15 years.


If you have large assets you can depreciate them over the life of the asset between 3 and 27.5 year based on the IRS asset tables.


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