What happens if a business doesn’t make money? A business legally must pay taxes if it has employees. Pay as you go businesses are required to withhold taxes from checks and deposit that amount.
LLC Tax Filing Status
LLCs with no income may still need to file taxes. Filing depends on how the LLC is taxed. An LLC may be taxed as a corporation, partnership, or disregarded entity.
Single-member LLCs and sole proprietorships with no income don’t need to file Schedule C unless claiming credits or deductions.
Tax Deductions and Liability
Popular LLC tax deductions include rental expenses. If a business made no money, enter zeroes on the tax return. The IRS treats single-member LLCs as sole proprietorships for taxes.
If the LLC lost money, it can impact finances and wellbeing. Monitor finances and take timely action to prevent losses.
The IRS will only allow you to claim losses on your business for three out of five tax years.
Starting a Business and Raising Capital
There are a few ways to start a business with no money: start a service-based business with low startup costs, find a business partner to invest, or seek grants/loans.
LLCs can elect C corporation status and make estimated payments higher than tax liability to get a refund. Non-capital losses can offset income over three back years and seven forward years.
LLCs can raise money by securing financing. You can check Illinois business name availability online.
Profitable hydroponic plants to grow and sell include microgreens, lettuce, radishes, bell peppers, and more.
Legal Considerations and Additional Tips
You can be personally liable if your LLC loses money or reputation due to your work. Have an LLC to protect yourself.
If a business has employees, it’s obligated to pay Social Security, Medicare, and federal unemployment taxes.
You’re required to have a registered agent and registered office no matter where you’re starting your business.
You can sue an LLC with no money. After the Tax Cuts and Jobs Act passed in 2018, your “net operating loss” carryforward is limited to 80% of your taxable income.
When a business isn’t making money, it could be due to no product-market fit, lack of capital, or poor marketing. Explore financing options and bootstrap methods, like selling your services, to start a business with little or no money.