IRS taxes with 0 revenue in first year


2

I created a corporation last fall and made no revenues (or expenses) in 2009. I obtained an EIN from the IRS and they asked me to file form 1120 for 2009.

What is the best way to do this? is it required? and Should I spend money on getting a tax program for this?

Incorporation Tax Revenue Bookkeeping

asked Mar 11 '10 at 05:02
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Nicolas K.
111 points

8 Answers


9

You need to hire an accountant. Even though you made no money and owe no taxes, your business still has to file a tax return. In addition, there will probably be loses your first year and your accountant will show you how to carry those loses forward into future years to lower your taxes when you do begin to make money.

answered Mar 11 '10 at 05:58
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Gary E
12,510 points

4

Get an accountant, not a tax program.

It is incredibly easy to screw up in a way that will cost you much more than having an accountant do your reporting.

answered Mar 11 '10 at 05:23
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Gabriel Magana
3,103 points

3

All businesses need to file a tax return even if they make no money. The best way to do this would be to hire a professional. That way, you are protected. If you just can't afford that, then the next best thing is a program. I would not recommend doing it yourself.

answered Mar 11 '10 at 05:38
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Jarie Bolander
11,421 points

3

I would definitely hire someone. I started out doing my own taxes using a program, but had to amend my filing due to a rules enacted by my state legislators that was retro-active.

Besides having to always file a Federal return, you may also have to deal with local and state issues. It gets even more difficult if you are operating as a "foreign" corporation.

Try to find someone who's well versed in not only in accounting, but also corporate tax accounting and reporting. Make sure they have experience doing the books for your particular corporate entity type (S, LLC/Partnership, C).

answered Mar 11 '10 at 08:13
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Erik Howard
121 points

1

Simplicity of tax filing and the corresponding reduced accounting cost is another benefit of an LLC over and S-corp. The income from my LLC is reported on a 2 page Schedule C addendum to my 1040 filing.

answered Mar 12 '10 at 04:49
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Jason Cianchette
511 points
  • I think this is dependent on state requirements as well. – Tim J 9 years ago

1

Hire a CPA or a tax attorney to do your tax work.

IRS agents can make your life miserable, and sometimes they single you out for extra scrutiny when you do NOT report very much net profit. They may suspect that you must be hiding something or lying about deductions. They can even decide that although your deductions would otherwise be legitimate, they are going to disallow them because they don't feel that it was reasonable for you to spend so much money on business expenses that your net taxable income was lower than they deem to be "reasonable".

If you get a bad IRS agent (and there are some) you'll at least be glad if you didn't try to do your own tax work. IRS agents are basically unaccountable to anyone and you'll never get a fair shake if you do get a bad one so you'll be glad that you have someone to back up the numbers on the returns.

Anyway, it's money well spent, and you can ask questions during the year without feeling like you're imposing.

answered Mar 14 '10 at 13:09
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Tcolling
433 points

0

you don't need an account for a zero revenue corporate return. They are pretty simple to fill out. Get Turbo Tax business. You will need to pay for the state version too. Just fill out all zeroes. It will generate the form. Since you incorporated you will have some deductions for creating the company. The loss will flow through to your personal income. So you might as well get turbo tax personal so you can upload it.

note that turbo tax nickles and dimes you. You have to pay for 4 versions.

turbo tax business(federal and state)
turbo tax person(federal and state)

it is cheaper than an accountant.

answered Feb 15 '11 at 06:06
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Bob
164 points

0

If your company engaged in absolutely no activity whatsoever during the past year, then there is little need to hire a CPA for the federal return. You should obviously file your 1120 to establish a paper trail with the IRS, and this can easily be done on paper or via tax filing software. As a general rule of practice, the IRS does not waste resources to audit companies that make no revenue (and therefore don't offer any income to the IRS), unless you give them sufficient reason to believe you're hiding something.

That said, if your company did engage in any activity over the past year, then you should consult a professional about that matter. Same applies to future tax years.

In addition, you should be wary of State tax obligations, which may be more complicated and require professional advice. Some states require a minimum franchise tax/fee for simply having a business entity registered with the state. For example, in California, the minimum franchise tax is $800, even if your company did nothing over the taxable year.

Disclaimer: The above isn't legal/professional advice, just observations from experience.

answered Mar 15 '10 at 16:20
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Henry The Hengineer
4,316 points

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