Tax Filing Question For LLC

[steiney]

Hello all!

This is my first post at this forum. My business partner and I are very close to launching an online business. We are based in the United States and will be operating under an LLC. The LLC was organized in 2014, however it has been completely dormant from the date of organization until the present.

My question is: Do we need to file a tax return for the LLC for 2014? Our thinking is that we do not because the LLC has been completely dormant, but we figured it would be wise to pose the question to more experienced and educated businesspeople.

Any help, suggestions, advice, etc. is greatly appreciated.

Thanks in advance,

steiney

[tallen]

There were no expenses involved in setting up the LLC? None at all? If there were (how could there not be?), wouldn't you want to claim them as a business expense? Or are you just going to throw them away?

Next question: Did you elect for your LLC to be treated as an s-corp? If so, then you would have to file an 1120S for the LLC even if you had no income. If you haven't chosen the s-corp treatment, and there is more than one member in the LLC, then you would have to file an 1065 Partnership return, again even if you had no income. If you are the only member, then you would include a Schedule C for the business on your own 1040 filing.

disclaimer: I am just some guy on the internet, you probably should be engaging the services of a qualified business tax preparer / accountant.

[steiney]

Thank you for the response, tallen! To answer your questions:

1. My partner organized the LLC with him as the only member (president). It is still organized that way. The only expense was the filing fees. The cost was $125. He did not use an "LLC set up service", etc. If we had no income in 2014, what would be the purpose of claiming the LLC set up cost as a business expense? Is it something that can be carried forward to the next year for deduction purposes?

2. The LLC is organized as a standard C-corp with my partner as the only registered officer. So, in filing taxes, it sounds like he needs to submit a Schedule C for the LLC on his 1040.

I really appreciate your help. And duly noted on the disclaimer!

[tallen]

(1) since your partner is the only member, this really isn't a concern of yours -- it only affects him or her. I don't know about carry-over of business expenses. The benefit to filing this year would be that your partner could claim that $125 as a loss, which could offset other income thus lowering his/her tax bill. But it's your partner's call.

(2) Sorry, you are either a standard C-corp or you are an LLC -- can't be both. If a C-corp, then the corporation files an 1120 return (paying any taxes due itself), and the shareholders don't do anything with regards to taxes unless they have received some sort of distribution (dividends reported on a 1099-DIV for example). Probably what you mean is that the LLC is to be treated as an S-corp when it comes to taxes. In this case, the LLC has to file an 1120S and gives your partner a K-1 -- the partner would not file a schedule C on his 1040, but would include the amount reported on the K-1 in the appropriate place on the 1040 (might be schedule E?).

[steiney]

1. Ah, very good point. Thank you.

2. Whoops! Thanks for the correction. It's been several years since I graduated from the University of Miami's School of Business! I see my memory/education fails me.

Thanks again for the help.