My single member LLC has been active since June 2023. During that time, I opened a business account and I transferred $1k to it from my personal account to pay for business related expenses. To this day, I’ve spent $400 from that $1k to get this business started. Unfortunately I haven’t made any money on the business. How does this translate to my taxes due in 2024?
Here's how you would handle filing taxes for your single-member LLC in this situation:
Even though your LLC has not made a profit, you still need to file a Schedule C with your personal 1040 tax return to report the business activity.
On Schedule C, report the $1,000 transfer from your personal account as "gross receipts.". This represents the money brought into the business.
Claim the $400 you spent on business expenses as deductions on Schedule C. Common deductible startup expenses include things like marketing, website development, supplies, etc. Keep records of all expenses.
The $1,000 transfer and $400 in expenses will net $600 in "net profit" on Schedule C, even though the business has not actually turned a profit yet.
You do not pay income tax on the $600 since the LLC is a "pass-through" entity. But you may owe self-employment taxes on the $600, which help fund Social Security and Medicare.
Any losses from the business can offset other income and potentially be carried forward to future years as a net operating loss.
Be sure to also file any required state tax returns for your LLC.
The key is reporting all business financial activity through your individual return by filing a Schedule C each year, even during unprofitable periods. This keeps everything above board with the IRS.
With my experience as a tax professional, I have consulted with individuals and partnerships on this matter. As a single member LLC, you can file a form Schedule C profit and loss with your individual form 1040 Federal Income Tax Return. A partnership return form 1065 would be needed if this were a multi member LLC. Please feel free to reach out with any further questions or clarifications.
Since your LLC is a single-member LLC, the IRS treats it as a disregarded entity (unless you’ve elected corporate taxation). That means all business activity flows through your personal tax return—you’ll file a Schedule C (Profit or Loss from Business) with your Form 1040.
Here’s how your numbers play out:
• The $1,000 you transferred into the LLC’s bank account is not taxable income—it’s simply your capital contribution (money you invested into your own business).
• The $400 spent on legitimate startup/business expenses is deductible. Since you had no income, your Schedule C will show a $400 business loss.
• That loss can offset other taxable income on your return (like W-2 wages), potentially reducing your overall tax bill.
• You will not owe self-employment tax on the LLC this year because there was no net profit.
In short, you’ll report the LLC activity even if it’s unprofitable. The contribution isn’t taxable, the expenses are deductible, and the net loss may help lower your taxable income for 2023.
