small business. No transactions yet. Do I have to file tax returns?

Answer 1

I'm assuming you're asking if you need to file an income tax return for 2006. You didn't mention whether or not you're incorporated. If you're incorporated, I would recommend that you complete the Form 1120, show zeros for income and expenses, make a copy, sign and mail. However, you may have some expenses you're not aware of: did you purchase equipment for this business? did you pay rent? did you pay for a business license? did you need to print letterhead? All of these things generate expenses. Even if you have no income, you may still be able to write off these expenses, which will generate a net operating loss (NOL). This is true whether you're incorporated or not. Remember, in order to deduct something, you must do it in the year the expense incurred, so it's now or never if you want to deduct those start up expenses.

Answer 2

If your small business has an employer's I.D. number separate from your social and you stated to the IRS during the application interview via telephone or on paper that you will commence business in the 2006 tax year, then yes you must file the appropriate tax form. Secondly, are your transactions expenses or income or both? If the answer is yes to either option, yes you must file.

Answer 3

I would say use an accountant to make sure your startup expenses go on there the right way.