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Do I have to pay tax on my llc if my business is not up and running yet? ?

Essentially, I decided to start a business about 4 months ago. At the same time, I am balancing a full time job and am using the money from my paycheck to building my business. I registered my LLC and applied for an EIN. I am the ONLY member. As such, I am working to get my business up and running. Unfortunately, I don’t think I will have an up and running store until September 2021. 

My question is for tax season 2021, will I need to pay tax on my business? Will it be a lot? I’m still confused about the tax thing for beginner LLC’s.

I’m located in New York City.  


To clarify, my business is an online business only (like Etsy etc) not a store front. 

Update 2:

Thank you. I ask this question because I know a few people who have an LLC and just started like me and they are being told they have to pay taxes on their LLC even though they didn’t make money. Something sounds suspicious and this made me confused. 

Update 3:

Paul: With the type of business I’m doing, I NEED an LLC and trademark. Why would I pay x amount of money for something I don’t need??Many advisors (lawyers, small business advisors, etc) all agreed for my situation and business type Anyway, I got my answer from everyone else about that question. Many people in life that aren’t happy with their own will try to discourage others instead of encourage and put in the right direction. Smh 

7 Answers

  • Anonymous
    2 months ago
    Favorite Answer

    What type of tax are you referring to?

    In my state you would owe B & O tax on every single sale you make.   You owe sales tax to the jurisdictions where the customer lives.    For example, if you sell to someone in Washington, you owe sales tax to Washington state.   If you sell to someone in Oregon, they don't have a sales tax.    You owe federal self-employment tax on all profit above $400 in a calendar year.    Your profit is subject to federal income tax too.   I don't know about NYS and NYC taxes.

    No one here knows if you will owe a lot of tax because we do not know what your gross sales and profit will be.     If you have zero sales, you will not have any tax.

    Get your books set up properly from day one and it will make putting the pieces together much easier.

  • 2 weeks ago

    For the vast majority of LLCs I have worked on, the individual owners/managers/members would pay any taxes on profits by the LLC, in proportion to their shares.

    Obviously, if not income, then no profit. Even with income, various business deductions may reduce taxable profits to zero for startup years.

    Yes, an LLC is "cheap insurance" ($50 in my state) for limitation of personal liability, provided you keep the accounting and power structure straight.

  • ?
    Lv 6
    1 month ago

    Don't forget about self-employment tax, the tax you must pay on business income for Social Security and Medicare. Even if your business is inactive, any business income or payments you receive during a year must be reported for self-employment tax purposes.

  • Paul
    Lv 4
    1 month ago

    There are so many things with an LLC and tax law that will affect you can cost you money, and you went and did it without any clue of what an LLC is or how it works.

    You're trying to DIY your business entity and tax compliance. You won't be able to do it. Just because creating a legally separate business entity like an LLC is easy doesn't mean it's not an incredibly foolish thing to do. Forming the entity and getting an EIN is by far the easiest thing anyone can do.

    Why did you form an LLC? You don't know, do you.

    Get professional assistance if the success of your business means anything to you.

    You could be taxed in one of many different ways, depending on your circumstances and which elections you've made. Elections? Huh?

    Many states will charge any business entity that exists whether it makes money or not. California, for example, charges at least $800 per year to renew your business license.

    What's your business start date? A business has started once all systems are in place for the business to operate whether any sales have been made or not. For example, a storefront business start date is the day the doors are opened for the grand opening, whether they sell anything or not. Most businesses are not as clear on the start date.

    Again, get professional assistance. I'm sure whatever you do looks really, really easy to someone who doesn't have any idea what you really do, and everybody thinks they could do it real easy if they buy a computer program, but I'll bet they'll be in for a rude awakening if they try to do it. It's no different here.

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  • Amy
    Lv 7
    2 months ago

    If your business isn't earning money, then there`s nothing to be taxed on. 

  • Anonymous
    2 months ago

    no earnings, no taxes. 

  • Maxi
    Lv 7
    2 months ago

    You pay tax on earnings and if you are not up and running a business as yet then you have no earnings... so obviously you don't pay tax

    Suggest you go and do a basic accounting /tax course so you understand the basics

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