Question

I have a question about filing a Schedule C for an LLC. I have an active LLC, but I didn’t operate it or earn income from it this year. Do I still need to file a Schedule C?

Answer

If you have an active LLC but did not earn income from it during the tax year then the answer is, no, you do not have to file a Schedule C for an LLC. However, there are some important considerations in the decision to not to file a Schedule C.

If You Don’t File a Schedule C…

If you don’t file a Schedule C for an active LLC, then you can’t do the following:schedule C 1040

  • Deduct any business expenses incurred during the year for a loss. Losses can offset other income on your tax return reducing your taxes.
  • Claim a loss (net operating loss) that you can carry over to offset income on future tax returns. (See rules about net operating losses due to CARES Act.)

Who Should File a Schedule C?

According to the IRS, you use a Schedule C, Profit or Loss from Business, to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for profit and you are involved in the activity with continuity and regularity.

When Would An LLC File a Schedule C?

A single-member LLC, that has not elected to be treated as a corporation, uses the Schedule C to report profit or loss from the business. The LLC is considered a business structure allowed by state statute for other legal purposes but is disregarded or ignored for tax purposes. Because LLCs are formed in the state, each state has different laws and regulations. Therefore, it is important to learn about your state regulations regarding an LLC.

More Information on Schedule C

View more information on Schedule C.

If you want more guidance with small business taxes, we’re here to help. Use the H&R Block small business services. We’re dedicated to serving small business owners with industry leading software, services, and in-person expert guidance to manage your business’ tax and financial needs.

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