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Can an LLC be used to pay for expenses incurred before any revenue?

Personal Finance & Money Asked by DCA on July 25, 2021

I want to establish an LLC for contract/consulting work, but there will be a fair amount of expenses incurred before I can hope to get some revenue. (e.g. hosting to build website, cost of software, laptop, etc.) Are these expenses tax deductible if it flows through the LLC? I expect that first revenue could be 1-2 years from now. I have a full time job now, and presumably will for a while and the contract work will be on the side.

One Answer

Business expenses are tax deductible, regardless of whether you have an LLC, a company or are just a sole proprietor.

But if you lose money for too long, the IRS may call what you do a hobby instead of a business: https://www.irs.gov/newsroom/hobby-or-business-irs-offers-tips-to-decide

Correct answer by Orange Coast- reinstate Monica on July 25, 2021

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