Sunday, December 05, 2004

[info] Business loss carry-forward

My uncle pointed out something important today about incorporating -- loss carry-forward.

So the idea is that, you may lose money in the first couple of years of starting a business, and then you get a break later when you start to make money. For example, if you reported a net loss of $10K the first year and make $50K the second year. When you file taxes the second year, you can deduct the loss from the 1st year, saving ooodles of tax dollars.

Question: Can an LLC, S Corp, or Sole Proprietorship carry loss forward? Or is it only C Corp?

Since I have income that I'd actually like to deduct from this year, I'm still gonna stick with sole proprietor. But next year, when I'm earning zero dollars, loss carry-forward would be a good thing.