Hello,
I formed an LLC in November 2008 to start a web-based e-commerce business. I have since had to put the project on hold, and have not launched the site yet. I have not earned any income through the LLC, and have paid for the setup of the company out of my own pocket.
What is your feedback on taxation? Do I have to actually earn income or show a loss to file taxes in 2008?
I would appreciate any help on this matter.
Thanks,
Michael
As an LLC, your taxation is the same as any other sole proprietor.
If the activity meets the test of being a business instead of a hobby, then you fill out Schedule C to report expenses. Some start-up expenses amortize over 60 months; others are subject to depreciation rules.
There is a wealth of information in Pub 334.
Steve
The money you've spent so far will likely qualify as START UP COSTS which you can amortize over 15 years or which you can elect to expense when you start operations. Since you've had no income it seems you have not yet started operations so you MIGHT be able to simply carry these costs until you open the doors.
You should still file the appropriate income tax form, if for no other reason than for proper disclosure.
Your bigger concern though should be your annual filings with the Secretary of State - or States. When you formed your LLC you had to file some forms with a state agency to get LLC status. Most states have annual filing requirements JUST to keep the organization alive and able to do work within the state. If, like far too many people who don't know better, you formed your LLC is a state other than the one you live in, you will most likely need to file an annual report in BOTH the state of formation and the state you live in.
Good luck, Gene E. Utterback, EA, RFC, ABA
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