Do I have to file taxes if my business didn’t make money?

Treyton DeVore
September 24, 2022
Topic of the week: Do I have to file taxes if my business didn’t make money?

While this shouldn't be considered official tax advice, here's how I would think about it:

When you're self-employed, your business income or losses are typically calculated & reported on your personal tax return via Schedule C (below).

Once you know your business income, that information is then transferred to your personal tax return (Form 1040).

Now, let's look at two different scenarios:

  • If your business income exceeded $400 for the year, you're required to file a Schedule C and report all income on Form 1040
  • If your business made no money and you didn't have any deductible expenses, you wouldn't have to file a Schedule C for the business (but you'd still need to file a personal Form 1040 if you had income from elsewhere)

In general, if there's no activity for the business, you wouldn't have to file anything for it.

If your business had losses or deductible expenses, you're technically not making money, but you'd still want to file to claim the deduction.

As a freelancer or self-employed creative, your business is most likely going to be a sole proprietor or a single-member LLC. These two entities are the most straightforward when it comes to taxation.

If you have a corporation or a partnership, tax filing & reporting gets a little trickier (even if there's no income) and I'm not going to dive into those nuances today because I think most people are either sole proprietors or LLCs.

Even though you may have a good understanding of how taxes work for your situation, I always recommend that you talk with a tax professional and work with them to ensure that everything is being done correctly. Different states can have different reporting requirements and taxes are one of the few things that you don't want to make mistakes with.

In my opinion, it's better to invest in professional help upfront than pay for errors down the road.

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