Corporation Never Made A Dime, Do We Have To File Taxes?

We have a Florida corporation that is over a year old and has never made any money. Do we need to file tax statements for the year or pay penalties for not having already done so?

Answer

A corporation is required to file taxes each year, even if it lost money.

Actually, it's a good idea to file a return if your corporation lost money during the year because, under the tax laws, you can carry losses both forward and backward.

Example: If your corporation made money in 2005 and paid taxes, and then lost money in 2006, you can apply your 2006 losses to your 2005 tax return and receive a refund.

In order to carry-back your losses, you need to file a turn return, however.

For LLCs taxed as partnerships or disregarded entities, it's also important to file your returns even in years where you lost money for similar reasons.

LLCs with pass-through taxation let you take your LLC losses (subject to certain limits) on your individual tax return. By failing to report your LLCs losses, you end up overpaying your personal taxes.

The bottom line is that you should file tax returns for every year in which your entity existed, even if it made a loss.