Made no profit this year should I still file taxes?

Question

I started dabbling in wholesaling a few months ago,I do not have an LLC. I haven’t made any profit yet and I’m wondering if I should still file taxes for my “business “.

Tinia James · Answer

Thank you for your thorough response. If I did have a 1099 I would definitely be filing. I’ll consider all that You said

Basit Siddiqi · Answer

If you operated a business, even without an LLC, you may potentially be able to write off certain expenses.

Joshua Thompson · Answer

Yes typically you'll file the wholesale activity on a schedule C unless it was done in an entity (S Corp, Partnership, C Corp) but I see above you don't have these. If you've been active in this business and actively pursuing a profit during the year, the loss the business generates could help offset other income on your tax return.

If you would classify this as more of a hobby which most people won't the first year, then the losses won't benefit you. Ignore this part if you're trying to make a profit with your wholesaling business.

Tinia James · Answer

Yes, but I do not have one.

So would I just file a regular schedule C.

Aaron Zimmerman · Answer

This activity will go directly on your Schedule C. You should absolutely report the activity on your return.

I would highly recommend getting a single member LLC. At some point, if your business takes off, the single member LLC gives you optionality to move to an S Corp (which typically means less self employment taxes).

Ashish Acharya · Answer

@Tinia James Yes, you should still file taxes even if you made no profit, especially if you incurred any business expenses. Reporting these expenses on your personal tax return (likely Schedule C for a sole proprietor) could result in a net loss that might offset other taxable income, reducing your overall tax liability. Additionally, filing establishes a record of your business activities, which can be beneficial for future deductions or tax compliance.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

Bill Hampton · Answer

@Tinia James

If you receive a 1099 showing income from one of your deals, you have to file a Schedule C to report that income. The IRS will receive a copy of your 1099. If you don't report the income, it could lead to an audit.

If you didn't receive any income but you had legitimate business expenses, you should still file a Schedule C to deduct those expenses.

I recommend finding a real estate and business accountant to help you with filing your taxes.

Bigger Pockets is a great place to find a real estate tax accountant.

A good real estate accountant can save you thousands of dollars by leveraging entity selection and formation, tax deductions, cost segregations, bonus depreciation and tax planning.

I recommend finding an accountant who specializes in real estate taxation, business taxation, financial planning and tax planning.

You may want to consider working with your accountant remotely to expand your options.

I would also recommend looking for a accountant willing to work with you throughout the year. You want an accountant who can help you strategize and who is responsive when you want to know the consequences of the financial decisions you are making throughout the year.

Good luck.

Chris Seveney · Answer

LLC is a pass thru entity so it should reflect on your individual return

Made no profit this year should I still file taxes?

Made no profit this year should I still file taxes?

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