Hello,
I'm new in the small business an horrified of the coming tax filing.
I didn't pay any taxes beforehand and I'm afraid that I'm in trouble with it.
I have had ONLY expenses not any income yet. What I should do? :confused:

If you don't have any income in 2007, then you won't owe any taxes. So there is nothing to be horrified. There is no need to file the tax return. You may file tax return to claim losses.

If your business generated some income but your business expenses are more than the income generated, then still you won't owe any taxes. You are not required to file your return. But, you should still file to show that had a loss. If you had income (income minus expenses) of even $400, you must file.

If you don't file, then the only problem is that IRS may ask about your tax return even after many years.

If you are a U.S. citizen or resident, you will file Form 1040. You will also file schedule C (Form 1040) where you will report your income and expenses.

MukatA:

He SHOULD file the return even if he has no other income sources because:

1) it establishes the fact that he IS in business.

2) it establishes a loss that can be used for Net Operating Loss (NOL) computations down the line.

Ingebg:

NOL is a complex calculation that allows you to either carry back or carry forward your loss to past or future years to offset taxes in those past or future years.

The NOL is NOT for amateurs; you need to get professional tax help to file a NOL.

Note: Some of the start up cost of the business will have to be amortorized over a period of years instead of taken as a direct expense. This can help offset income in later years.

Agreed; start-up costs must be amortized over five years.