How do I expense LLC startup costs when I have no income?

Question

Looking to form an LLC to start a franchise. The business will not be in operation until March of 2007, however I will have expenses in the last few months of 2006 (franchise fee/LLC formation expenses/etc). How do I do a tax writeoff for those expenses if I'm not going to be making income until the year 2007? Can I clam these expenses on my personal taxes?

Business is going to be formed in the state of Louisiana.

The question isn't necessarily how (as in which forms) to file deductions, but how can I get a tax break when I'm not making any money via the business yet? I don't want to waste those deductions.

Answer 1

Start up expenses are deducted only when the business is operational. You can deduct up to $5000 with the rest amortizable over 180 months. Sorry, no tax benefit in 2006 but you will get it in 2007.

Answer 2

There are little or no to no reward of forming a single guy or woman llc. i do no longer understand why human beings rush into forming "firms'. have you ever spoken to a tax professional on the matters on the subject remember of them? In CA and different states there's a tax just to exist. $800 in CA and around 1k in Ohio. some startup expenses are deductible and a few could be amortized.

Answer 3

Which country are you in? if in the US, Look up in IRS Pub 17, the words, "loss". This will be a loss, and these things are too complicated to give an acceptable answer via YA, with few details.

If you form another business entity, then of course, the tax forms have to be for that entity, not for your personal taxes.

Any money you put in a business should be on the books as an investment in that business. Sounds like you need to get a CPA to help you set it up. You can really get messed up with the tax people if you don't know what you are doing. And,your questions are like Business 101.

Answer 4

As an LLC you use a schedule C to report profit/loss from a business and plug those numbers ino your 1040 on the appropriate line.

Answer 5

You cannot expense anything unless you have income.