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jgordosea
jgordosea, Enrolled Agent
Category: Tax
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Experience:  I've prepared all types of taxes since 1987.
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I formed a new LLC (Consultancy Services) in june 2012 and

Resolved Question:

I formed a new LLC (Consultancy Services) in june 2012 and obtained an EIN. However, I have not secured any contract and do not expect any contract in the near future.
Do I need to file a tax return? How often?
Alternatively, can I can the number and re-activate it after I secure a contract?
Submitted: 2 years ago.
Category: Tax
Expert:  jgordosea replied 2 years ago.

Greetings,

 

For federal income tax, only a corporation is required to file when there is no income for the year. Unless the LLC elected to be taxed as a corporation there is not a return required when there is no income.

 

For a single member LLC that is taxed as a sole proprietor it is advantageous to file once activity starts even if no income is yet received. Business starts usually when one offers the goods or services, whether or not a contract is secured.

 

As soon as the business is active up to $5,000 of start up expenses can be deducted. Start up expenses are the costs prior to offering services (such as the cost of forming the LLC). For more detail see http://www.irs.gov/publications/p535/ch08.html#en_US_2011_publink1000208939

 

 

It is possible to wait until the start of business to use an EIN. An EIN can first be used in a later year than it was issued. If you did not start business the EIN can be used later.

 

Starting this year, Michigan has a tax on C corporations that does not apply to the LLC instead of the former Michigan Business Tax.

 

If this is a sole member LLC no return is required for no income; but there is some advantage to filing Schedule C when the activity starts.

 

Please ask if you need clarification.

Thank you.

 

 

 

 

 

 

 

 

 

 

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Customer: replied 2 years ago.


Mr. gordos,


 


thank you for your prompt reply. However, I still need answers to the other parts of the concern initially stated>



  1. In case if I file, do I need to file quarterly or annually?

  2. can I can the number and re-activate it after I secure a contract?


 


Regards,


 

Expert:  jgordosea replied 2 years ago.

Hello again,

 

Unless there are employees or sales tax due only the annual tax return is required for the business.

 

As mentioned, an EIN can first be used in a later year than it was issued. If you did not start business the EIN can be used later. There is not any process to can or deactivate the number, just use it when business starts.

 

Please continue to ask if you need clarification.

 

Thank you.

 

 

 

 

 

 

 

 

Please remember when you are asked to rate my service that you are rating me, personally, for the service and information that I have provided. You are not rating this website or the situation itself. A positive rating is the only way that I receive credit for my time and effort to assist you.

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3072
Experience: I've prepared all types of taxes since 1987.
jgordosea and 2 other Tax Specialists are ready to help you

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I've prepared all types of taxes since 1987.