To file or not, that is the question!

[gaspin]

Background: Two friends and myself created an LLC based in Indiana back in January. Since then we have been developing a website with the help of a contracted third party and using funds we have provided. We are still in development on the same project and have paid aprox $6,000. Now it's come time to file!

I spoke with a CPA about doing our taxes for us and the estimate was a bit over our heads as we have no income yet and everything's out of pocket going to the business. However, he did give a final bit of advice which is why I post. He stated that because we're still on the same project, we could consider this a "work in progress" and carry it over into 2014. This would eliminate the need to file this year and we would lump everything together next year. However, all of this was prefaced by saying "While filing a return for 2013 would be proper, I would argue....."

Therefore, I'm left with a few options:
1) File through a common online source, Turbotax, and try my hardest to get things right (1st time filing!)
2) Ignore the issue and lump everything together for next year.

If you have any ideas on how to play things and have experience with a similar issue, please let me know!

[Fulcrum]

I'd say get a second opinion from another CPA. I don't know much about the legalities behind not filing, but what this CPA recommends just doesn't sound right to this blue collar guy.

[Evan]

I don't think you understood what the CPA was saying, as him suggesting to NOT file a return would be malpractice.

What he likely meant was these expenses you're incurring are start up costs, and as you haven't begun operations, all of those should be capitalized as start-up costs which you'd start amortizing when you finally actually are operational. You still need to file a return with 0 income and 0 expense (no deduction until you are operational). You also need to pay any state taxes that may be charged, many states charge a minimum business tax ranging in prices from peanuts to pearls.

If your business goes defunct, depending on what your start up costs were, all of those would likely be non-deductible personal losses. Certain things (like equipment) can be sold with you recognizing a gain/loss.

Refer to Publication 535 (2012), Business Expenses (http://www.irs.gov/publications/p535/ch08.html)