For those just getting started as a business, filing taxes may not be the first thing that comes to mind. In fact, some businesses can get away with this (for the first year or so), while others cannot. It’s better not to take any chances, as things can get expensive if you fail to meet your tax obligations from the start.
Depending on your company’s entity type and initial business activities, you may not have to worry about filing taxes right away. Here are some guidelines that will help determine whether your new business requires immediate tax filing responsibilities:
- Partnerships: In the initial year(s) of business, U.S. partnerships do not need to file a federal return if the business hasn’t received income or incurred any expenses treated as deductions or credits for federal income tax purposes. Partnerships should only follow this rule in the period of time between forming their business and once they actually start paying expenses and receiving income through the business.
- Corporations must file a federal tax return regardless of whether they have taxable income. This means that if you form a corporation, even if you spent no money and received no income, you must still file a corporate federal tax return.
Remember, once you file your first return as a business, tax authorities will expect the returns annually up until you file a “final year” tax return (making it clear that you won’t have any future activities or correspondence with the IRS).
Consult your CPA before making your final decision, as your case may be unique.
If you have created a business and have yet to start major operations, be sure to consult with a tax professional to ensure that you remain in compliance with federal and state tax laws. If you need help managing any aspect of your business’s or nonprofit’s finances, we want to hear from you. Call us at (301) 913-0008 or email email@example.com to make an appointment.