Do I need To File Taxes If I Didn’t Make Money?
Still confused about filing when you didn’t make any money. That’s ok. I go over in this episode all the information you need to know in order to properly claim your expenses and file your taxes correctly.
The Great Recession
This has been a really crazy couple of years. One of the things that makes it so crazy is the number of people who have chosen, whether because of the pandemic or some other reason, to quit their jobs and start their own businesses and side gigs. This is really cool. I am always on the side of starting your own business, and being an entrepreneur. But what a lot of people don’t realize is that if you create an LLC, no matter how small your business is or how much you made over the year, you have to file taxes for your business.
Starting A Business
When you start a business, you don’t technically need to start an LLC. It is totally possible to form a Sole Proprietorship which has entirely different tax filing needs that could be extraordinarily helpful in the event that your business does not make any money. The issue is that Sole Proprietorships also leave you open to unlimited liability. What does that mean?
Well, if you’re an LLC and someone trips in your store and sues you, that wouldn’t be any fun, but the worst they could do is mess up your business’s finances for a year. That is because filing for an LLC means they can’t sue you as a person, they can only sue your business. But if you’re a sole proprietor, they can sue you personally. That means they can potentially go after your car, your home, your personal assets, whatever. This is why I spend so much time in my books, coaching, and lectures encouraging people to file an LLC if they can.
Filing an LLC might be the best move for your business, but you need to know what to do with it once you start making money. Why? Because LLCs have a higher tax burden when compared to other ways to file. LLC’s are great for starting out, but when you start to be profitable, other options like an escrow might save you more money on taxes. How do you know when? Ask your accountant! They’re trained to answer these questions.
Still confused about filing when you didn’t make any money. That’s ok. I go over in this episode all the information you need to know in order to properly claim your expenses and file your taxes correctly. Give it a listen for all the detgails, but remember: the government requires you to file taxes, even if you don’t make any money. Be sure to file as soon as you can!
Hear more details in THIS episode of Talk To Tatiana