Tax treatment for an LLC with an EIN that is not yet open for business

[ApolloF]

I formed an LLC as a sole proprietor with my state and acquired an EIN during 2025. However, my business is still in the development phase with no products available, so in 2025 I only have expenses related to the start up of my business. For tax purposes when is my company 'open for business', do I have to file for my business for the 2025 tax year, and how are the business deductions for my 2025 start up costs handled?

[Opus 17]

If the business is not an ongoing business activity (you are not recruiting customers, you are not performing work) then you have "startup expenses."  (But, if you are "open for business" -- recruiting clients and performing work-- then you would file a return with your expenses even if you have not received any revenue yet.)

 Your startup expenses are saved and reported on the business return for the first year that the business has ongoing business activity.  The startup costs can be deducted in the first year, or can be spread out over 15 years, according to a formula that I don't know but is built in to Turbotax.  Note that this only applies to expenses, your startup costs that are assets are listed as assets and depreciated in the usual way for assets. 

Also note that in most cases, an LLC with more than one member must file using Turbotax Business, which is a different program from the personal tax program.  The business return issues a 1099-K to each member that is reported on the member's personal return. 

[LeticiaF1]

Timing is important when deducting business expenses.  For Start-up Business expenses you can deduct them in the year your business is operational. The business start date is the date when a company starts its actual operations, rather than the date of incorporation or registration. It is the day when the business officially begins providing goods or services to customers, generating revenue.

Start-up expenses have to be amortized with a recovery period that starts with the month the business begins to operate active trade or as a business.  See the following IRS page for more information on deducting start-up expenses. 

Here’s how businesses can deduct startup costs from their federal taxes

If you would like to see more information about Start-ups, see the TurboTax help article below:

Start-up business tax tips

[ApolloF]

So for my business which is currently not open for business and only has startup expenses, do I have to file a schedule C this year (there is only one member)? Note that my business has a federal EIN, so is the IRS expecting me to file even during the startup phase? And if I do file, I presume I don't list my business expenses this year?

[Opus 17 · Accepted solution]

---

@ApolloF wrote:

So for my business which is currently not open for business and only has startup expenses, do I have to file a schedule C this year (there is only one member)? Note that my business has a federal EIN, so is the IRS expecting me to file even during the startup phase? And if I do file, I presume I don't list my business expenses this year?

---

If your business is not ongoing as a business activity, you don't have anything to file.  The IRS does not require that you file just because you have an EIN.  You file if you have business activity to report (profit or loss).