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Level 2
posted Feb 24, 2022 9:01:42 AM

Should I still file for a Sole Proprietor if I only started with no income?

I have started a sole proprietor business last year but I didn't start selling books online until this year. Should I still file that business on my tax return with my W-2s and 1099 NEC jobs?

I only have startup costs like paying a cover designer, editors, advertising, etc.

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1 Best answer
Expert Alumni
Feb 24, 2022 9:25:01 AM

Yes, report your business and claim your expenses even if you didn't have any income. To be deductible, a business expense must be both ordinary and necessary.

 An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Irs.gov

To report your self employment expenses:

  • Log in to your account.
  • Select Federal from the left menu.
  • Go to Wages and Income then select Income and Expenses.
  • Go to Self-employment income and expenses and click start. you'll be asked some general questions about your business. After you answer them, you’ll be taken to enter your Expenses.

However, a start-up cost is recoverable if it meets both of the following requirements:

2 Replies
Expert Alumni
Feb 24, 2022 9:25:01 AM

Yes, report your business and claim your expenses even if you didn't have any income. To be deductible, a business expense must be both ordinary and necessary.

 An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Irs.gov

To report your self employment expenses:

  • Log in to your account.
  • Select Federal from the left menu.
  • Go to Wages and Income then select Income and Expenses.
  • Go to Self-employment income and expenses and click start. you'll be asked some general questions about your business. After you answer them, you’ll be taken to enter your Expenses.

However, a start-up cost is recoverable if it meets both of the following requirements:

Level 2
Feb 24, 2022 9:29:50 AM

Thank you for your response. That helps a lot!