When to file taxes on new llc

[Tucan]

Hello experts,

I'm currently in the beginning stages of starting a LLC with a partner.  The LLC is registered in Massachusetts for selling a physical product online. We're currently in the process of setting up a bank account and still just working on putting everything together we need to start selling. I know we would have to file taxes this year if we want to receive deductions on our start up costs, but they’re pretty low right now. With the cost of filing business taxes, is there a certain $ of start up costs to hit before it would even be beneficial to file? Cost of filing > benefits to filing. Can we wait to file next year? 

[emina]

Hi, happy to assist!

Congrats on your new business! 

A domestic LLC with at least two members is classified as a partnership (form 1065) for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation.

Assuming you formed a partnership, yes, filing is required, the cost of filing would depend on who you hire to file your returns 🙂

When 1065 is filed, you will receive a K1 that will go on your personal 1040.

Your interest in partnership, partnership agreement, if you are active participant in the partnership or not, etc are the details that are necessary to determine the affect on your returns. 

Unused losses may be carried over to offset any future income. 

This is just general information.

Here are some helpful links: 

Start Up Costs Quickbooks Link

Start Up Costs IRS link 

IRS link on filing requirements

[Tucan]

I’m sorry but I don’t understand, we have had and will have no income in 2022 to owe taxes on.

[tagteam]

Are you (is the LLC) open for business, @Tucan?

If so, you should file an income tax return for the LLC. 

[Tucan]

No - we aren’t open for business, that’s what I thought I explained in my previous posts. We have only made a prototype, the LLC and are still setting up a bank account. We have so much more to do before we can be open for business. It won’t be until 2023 that we are open for business. 

[tagteam]

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@Tucan wrote:

No - we aren’t open for business.......

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Then you should have neither income nor expenses, but only startup costs and, possible inventory and/or asset purchases.

As a result, you would not file until the tax year that you are actually open for business at which time you can deduct (or amortize, depending upon the amounts) startup costs.