View Full Version : Tax option for multi-year losses in startups/small business

11-23-2010, 03:42 AM
Consecutive losses with LLC - tax as C corp to avoid looking like a hobby?

Single member 3 year old NYS LLC has had 3 years of (small) losses (zero revenue), filed as deductions via schedule C.

To avoid redflags and audits, is it recommended to quickly switch to taxation as ( C-)corp to be able to accumulate further losses?
2010 will be loss, 2011 onward should be profitable.

In such a simple case, to get the C corp taxation of the LLC right, what is a reasonable total fee for all tax filings by a good tax accountant?

thanks a lot.

11-27-2010, 09:41 PM
NYS... what area? In the city? Do you have all the information.

If the losses were attributable to an LLC, and it is taxed as an C-Corp (very unwise), you file an 1120, not 1040 Schedule C. Schedule C is for sole proprietorships, or disregarded LLCs (generally). Or are you potentially considering switching taxation to a C-Corp to avoid it potentially looking like a hobby? Explain this a bit further.

I'm assuming you've already summarized the information? Were there many transactions?

I'd estimate at least $400 per return if you also are consulting with a CPA and have your information ready. If they have to do bookkeeping, it'll probably be higher. If you're in NYC, probably $600 minimum. You can find cheaper, of course, but you qualified your search with "good" which is subjective.