If I established my own LLC/business last year but did not earn any income, I don't have to file any taxes right?

[Introspective Introvert]

I'm new to the world of entrepreneurship and had high hopes of landing clients for my freelancing business last year, but unfortunately I had no luck and did not earn any income at all.

I apologize if this comes across as a dumb question, but since I made literally zero income, I don't have to file taxes for last year right? I'm the owner of a single member LLC so I think my taxes are taxed and perceived the same as those who are sole proprietors. I began paying for my business expenses (monthly fees for management system subscriptions and bank fees with the money I deposited in my business bank account when I first created it.

I'm still searching and applying for job opportunities right now, and hoping to finally get clients this year to compensate for last year's financial flops.

It's way less embarrassing asking this online than in person with a tax professional lol. So I really appreciate your input, thank you!

[LudwigVan_fan]

I would file a return.  You must have had some income from somewhere, or else how did you live and pay fees etc.?

As for the business, single member LLC, unless an election is made for some other form of business, does default to a Sch C, Sch F, Sch E...depending on the business.  From your brief description, I would say Sch C.

There may be some startup expenses that need to be decided on how to expense them.  Elect to expense them, capitalize them and amortize them, etc.  Any elections need to be made in the first year.

See Publication 583, Starting a Business and Keeping Records

https://www.irs.gov/publications/p583#en_US_202012_publink1000253143

[MinhT1]

If your LLC had no income and no expenses in 2021, you are not required to file a tax return for your LLC. 

However, if your LLC had no income but had deductible expenses, then you have to file a tax return.

If the expenses are start up costs (incurred in connection with creating an active trade or business or investigating the creation or acquisition of an active trade or business) then you can elect to deduct up to $5,000 of start up costs in the year in which the active trade or business begins. Any remaining costs must be amortized.

If you started your business in 2021 but it begins to become active only in 2022, you can deduct up to $5,000 of start-up costs in 2022.

If the expenses are ordinary expenses (such as rent, utilities), then they are deductible in the year they are paid.

Also, if your LLC is a single-member LLC or a husband-wife LLC in a community-property state  (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), it is a disregarded entity for tax purposes and you can file a Schedule C for your LLC on your personal joint tax return.

Otherwise, you have to prepare a LLC return (form 1065). You cannot use TurboTax online to prepare form 1065, but have to use TurboTax Business which is only available as a CD/Download on a Windows computer (not compatible with Mac).

You can purchase TurboTax Business from this page.

[Introspective Introvert]

Thank you for your input! I have been unemployed for around 4 years now, and did not earn any income from a traditional job. It's difficult for me to take on for traditional in-person jobs because of my health conditions so basically the money that I saved to get training was money saved from money I received from my family for being a caretaker for a disabled family member who needs to be monitored 24/7.

I paid for my skills training program with my personal account and not my business account and only started switching over to paying for my business expenses whenever I set up my business bank account.

I still live with my parents so I don't have to worry about housing and food costs for now, and my expenses equated less than $200, but yes, I'll look into this more just to double check and make sure. Even if I do have to file, I hope it can be done simply through Turbo Tax.

[Introspective Introvert]

Thank you for your input! Now I realize that my situation is a bit more complicated than I thought. I paid for my skills training program with my personal bank account and not my business account and only started switching over to pay for my business expenses whenever I set up my business bank account. I recently turned 27, so since I'm no longer classified as a dependent through my parent's taxes but I might have to inquire a bit further. So far, my deductible business expenses equate less than $200 on my business bank account, but I'll find someone to contact to see which next steps I should take to make sure. I really appreciate your input, thank you again!

[DMarkM1]

Be advised you could still be a dependent on your parent's return.  If they provided over 1/2 of your support and you made less than $4300 in 2021 you could be a qualifying relative for up to $500 credit on their return.

• The person can't be your qualifying child or the qualifying child of any other taxpayer.

• The person either (a) must be related to you in one of the ways listed under Relatives who don't have to live with you , or (b) must live with you all year as a member of your household (and your relationship must not violate local law).

• The person's gross income for the year must be less than $4,300.

• You must provide more than half of the person's total support for the year.