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    Do I have to pay taxes on a business that's not making money?
    I have had my business for several years now and want to start a new business. I have a great idea for a name and want to get it incorporated so no one else takes the name. I'm concerned that if I incorporate the name will I have to start reporting it at the end of the year even though it is not actually making money yet. I wondering if it will cost me more money than I am actually making since I don't plan on starting the business for another year or so. I just don't want anyone to take the name. I never dealt with this type of issue since my first business I immediately started working and making money.

    Any help is appreciate.

    AL


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    I think you have to file the tax but I don't think you have to pay additional tax because you're not making any money. One thing though, you can file the loss on the tax form because you are losing money rather than earning it. If you know you're not making money after a period of time, then you should claim loss on the tax, but you should talk to your accountant about this to make sure.


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    It would be best to file the taxes anyways. I don't think that the government will charge you any money since you have no profits. You should go to irs.gov and talk with customer support for more detailed answers.


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    The key word in the phrase "Income Tax", is "Income". So if you are not generating revenue, you will not be paying tax. You will however be entitled to claim deductions for your startup costs.


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    Short answer, no, you don't have to pay taxes, however, you still need to report it to the IRS, and if needed, to your State. If you decide to incorporate, it's a whole new ball game. First, you'll need to file the necessary documents to make your corporation official. In general, those will be at the State and Federal (i.e., IRS) levels. Once you have created your corporation, you'll need to file two separate tax returns, one on the 1040 (personal tax) and another, for your company (e.g., 1120S, if your company is considered an S-Corp). If you hire an accountant to do your taxes, expect to pay around $700 - $750 just for filing an S-Corp tax return. And depending on your State's policy regarding corporations, you may need to file an annual report and pay a fee. So, even if you report a loss or zero income, incorporating will sill cost you some money.


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    It sounds like you are starting the corp just to protect the name (in the short term). Have you considered trademarking the name, instead of opening a corporation?


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    It's still best to indeed file and declare it and they will see anyway how much it's making. If it's not making any money at all, then there's no reason that they would tax you as far as I know.The tax payment would depend on how much your business is making. So if it's not making anything, there's your calculation. But you have reconfirm it to your state rules. It varies per state.


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    File it, that way you won't be running into any trouble later. Most likely you won't have to pay anything due to not making a profit.


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    Business that don't have income or turnover usually don't have to pay anything. This is how it works in countries where the progressive income tax is applied. Where I live, in Albania, businesses with a total turnover of less than 2000 euros per year also pay no tax.


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    It is logical to think that if you don't have any income at all (break-even or a net loss), then no tax should be paid. Also, the net loss could be carried forward or carried back in order to help the business recover from the losses. Still, you have to file a return so that the IRS would know what's happening to your business and so that you could claim a net operating loss carry over (or carry back) later on.

    But, you know what? In my place, even if a corporation experiences a net loss, there's still a tax to be paid. Rip-off!


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