First Tax Year of a New LLC or Corporation: Short Year, Due Date

First tax year of a new LLC or corporation: the rule by entity

A new company's first tax year, or first financial year, starts when it comes into existence for tax purposes and ends on its first year-end, so the first return usually covers a short tax year. A first sale is not needed to start it. The due date counts from that year-end, never from the formation date (Publication 538).

The start rules are in the Form 1128 instructions and Form 2553 instructions; the filing rules in the Form 1120, Form 1120-S and Form 1065 instructions; LLC classification on the IRS LLC page.

A first year stops being simple when:

• the first year has ended and no return was filed because the company had little or no activity;
• an S or corporate election takes effect after the first day: until then a corporation files as a C corporation, and an LLC as a partnership or on its owner's return; a Form 8832 effective date can reach back at most 75 days (26 CFR 301.7701-3(c));
• an LLC without a corporate election gains or loses members in the first year, which switches it between a partnership and its owner's return (26 CFR 301.7701-3(f)(2));
• a foreign person owns the company;
• founders paid costs before formation or before opening, which can affect whether a multi-member LLC files Form 1065;
• the company was formed in December, or wants a year-end other than December 31;
• the company has activity or registration in more than one state.

Gather the formation certificate and date, the date business began, the dates shares or membership interests were first issued and money first deposited, the EIN notice, any Form 8832 (corporate tax election) or Form 2553 (S election) with the IRS acceptance letter, bank statements from the first day, receipts for formation and pre-opening costs, and each owner's contributions and loans.

Does the first tax year start at formation or at the first sale?

For a corporation, at or soon after formation, not at the first sale. Its first tax year begins on the earliest date it first has shareholders, has assets or begins doing business (Form 1128 instructions; Form 2553 instructions). Issuing founder shares or putting money in its bank account starts the year. In the IRS example, a corporation organized July 1 on a calendar year files its first return for July 1 through December 31 (Publication 538).

When the state charter comes before any shares, assets or business, the sources point two ways. The Form 1128 instructions start the year at the first of those three events, but the regulation requires a return from any corporation in existence for part of a year. It excuses a chartered corporation that never completed its organization, did no business and had no income only on a proper showing of those facts to the IRS; otherwise a return for that stretch may be due (26 CFR 1.6012-2(a)(2)).

A partnership, including a multi-member LLC, generally starts its first tax year when business operations begin (Form 1128 instructions). Whether it files for that year depends on whether it had income or spending treated as deductions or credits.

A single-member LLC that has not elected corporate tax is disregarded for income tax, so it has no tax year of its own (IRS: LLC).

Does a corporation file for a short first year with no income?

Yes. Every domestic corporation not exempt under section 501 must file an income tax return whether or not it has taxable income (Form 1120 instructions), and a company that existed for only part of the year files for the time it existed (Publication 538). A corporation formed in November that holds only its founder's capital still files Form 1120 for November and December.

An S corporation files Form 1120-S only for years its accepted election is in effect; the IRS says not to file Form 1120-S for any year before the election takes effect (Form 1120-S instructions). If the election starts with the next tax year, a corporation's short first year is a C corporation year and files Form 1120; an LLC files as a partnership or on its owner's return until the election takes effect (Form 2553 instructions). Election timing is covered in S corporation from day one.

Tax on a short first year is generally figured as for a full year ending on the short year's last day. Annualizing applies when a business changes its tax year, not to a first year (Publication 538; 26 U.S.C. 443).

Does a multi-member LLC file Form 1065 for a first year with nothing in it?

Not always. A domestic partnership must file Form 1065 unless it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes (Form 1065 instructions). A domestic LLC with two or more members is a partnership for this test unless it elected corporate tax (IRS: LLC). An LLC owned only by spouses as community property may instead report as a single-member LLC (Revenue Procedure 2002-69; see Spouse and family LLCs).

Paid formation costs make this a judgment call. Partnership organization costs and start-up costs become deductible only from the tax year the business begins (26 U.S.C. 709; 26 U.S.C. 195), and the instructions do not say how such costs count in a year before business begins. Once business has begun, ordinary business expenses are generally deductions, which brings the partnership inside the filing rule.

Have a formation-costs-only year reviewed before skipping the return. A late Form 1065 costs $260 per partner per month, for up to 12 months, even when no tax is due (Revenue Procedure 2025-32; Form 1065 instructions).

Single-member LLC: is there a separate first tax year?

No. A single-member LLC that has not elected corporate tax files no income tax return of its own (IRS: LLC). The owner reports the business on Schedule C (or Schedule E or F) with their own Form 1040, for the owner's tax year, and checks line H in the year the business started (Schedule C instructions).

For an LLC formed in December that opens in a later year, the owner's first Schedule C for it is generally for the year it opens. Formation and pre-opening costs follow their own rules, set out in Startup costs for an LLC or sole proprietor. The LLC is still a separate entity for employment and certain excise taxes (IRS: LLC). A foreign-owned single-member LLC has its own first-year reporting: see Foreign owner filing for the year you formed.

For a business formed in March, is the deadline April 15?

Only for a C corporation or a sole proprietor on a calendar year. A partnership or S corporation on a calendar year files by March 15. The deadline counts from the end of the tax year; the formation month does not move it (26 U.S.C. 6072).

A due date on a Saturday, Sunday or legal holiday moves to the next business day.

Form 7004 gives an automatic six months to file Form 1120, 1120-S or 1065 when filed by the original due date. On line 5b, check "Initial return" as the reason for the short year. It does not extend the time to pay (Form 7004 instructions; Form 7004).

Formed in December: does an LLC or corporation file taxes for one month?

A calendar-year corporation, yes: one that starts December 10 files Form 1120 for December 10 through 31. A multi-member LLC files Form 1065 for December only if it had income or spending treated as deductions or credits. A single-member LLC files no income tax return of its own; its owner reports the business from the year it opens.

A C corporation can avoid a one-month return by adopting a fiscal year on its first return, such as a November 30 year-end, so the first return runs from formation to the next November 30. It may do so only if it keeps its books on that year; a personal service corporation must generally use the calendar year (Publication 538; Form 1120 instructions). Filing the first return adopts the year. Naming a closing month on the EIN application, filing an extension or paying estimated tax does not (Publication 538).

S corporations and partnerships generally must use a required tax year (Publication 538). For an S corporation that is generally the calendar year; for a partnership it generally follows the tax year of the partners holding a majority interest, which is the calendar year when they are calendar-year individuals. A December start then usually means a one-month first return. Exceptions and elections are in Fiscal year or calendar year.

What does the first short-year return need?

The short period's dates, the first-return box where the form has one, and books that start on day one.

• Tax year line: fill in the short year's start and end dates at the top of Form 1120, 1120-S or 1065 (Form 1120 instructions; Form 1120-S instructions; Form 1065 instructions).
• First-return box: check "Initial return" in item E of Form 1120 or item G of Form 1065. Form 1120-S has no such box; it asks the date incorporated and whether the corporation is electing S status beginning with this tax year.
• Books from the first day: record owner contributions, loans and every payment from the start of the first tax year. Balance sheets on the return should agree with the books (Form 1120 instructions).
• Owner statements: Form 1065 and Form 1120-S give each owner a Schedule K-1.

Preparing the return step by step is in Filing your first business tax return; a C corporation with no revenue is in First corporate return for a pre-revenue startup.

Which other first-year dates depend on the start date?

The first-year start date also sets the S election window, a C corporation's estimated tax schedule and when pre-opening costs begin to be deducted.

Does the state want a first-year return too?

State filings follow each state's own rules, and a federal answer does not settle them. Check which state returns your business files, California minimum tax and LLC fee, Texas franchise tax, Delaware franchise tax and LLC annual fees and reports by state.

What if the first short-year return was never filed?

The return is still due, and penalties run from its due date. A late Form 1120-S costs $260 per shareholder per month, for up to 12 months, even with no tax (Revenue Procedure 2025-32); Form 1065 works the same way per partner, though a small partnership of US individuals who each reported their share on time may qualify for relief (Late partnership return penalty relief). A late Form 1120 is penalized on the unpaid tax: 5% per month, up to 25%, and once it is more than 60 days late, at least the smaller of $535 or the tax due. The IRS can remove these penalties if the company shows the delay had reasonable cause (Form 1120 instructions; Form 1120-S instructions; Form 1065 instructions). See Catching up on unfiled business returns and Late filing and payment penalties.

Example

These scenarios are illustrative; amounts are in US dollars.

Texas corporation incorporated November 20

A corporation is incorporated in Texas on November 20, 2026, issues founder shares that day for $1,000 and does nothing else. With a calendar year, its first Form 1120 covers November 20 to December 31, 2026, is due April 15, 2027, and has "Initial return" checked. Had it filed Form 2553 by February 3, 2027, for S status from November 20, its first return would instead be Form 1120-S, due March 15, 2027. Texas franchise tax is a separate check.

Two-member LLC formed March 1

Two calendar-year individuals form a New Jersey LLC and start work on March 1, 2026. By December it has billed $15,000. Its first Form 1065 covers March 1 to December 31, 2026, and is due March 15, 2027, not April 15. Each member gets a Schedule K-1. Form 7004 filed by March 15 extends the filing date to September 15, 2027. New Jersey's own filings are a separate check.

Single-member LLC formed in December

An owner forms a single-member LLC in December 2026 and pays a $300 filing fee. The business opens with its first sale in February 2027. The LLC files no 2026 federal return of its own (state filings are a separate check), and the owner's first Schedule C for this business goes with the 2027 Form 1040, due in April 2028. The December fee is a formation cost, recovered under the rules in Startup costs for an LLC or sole proprietor.

Different for you?

• Your corporation or multi-member LLC was formed late last year and filed nothing: see Catching up on unfiled business returns and bring the formation papers, the date business began and bank statements to corporate tax help.
• Your multi-member LLC's first year had only formation costs: bring the receipts and dates to corporate tax help before skipping Form 1065.
• You want S corporation tax from the first day: see S corporation from day one; for a missed window, Late S corporation election relief.
• A foreign person owns the company: see Foreign owner filing for the year you formed and cross-border tax help.
• Your startup C corporation had no revenue: see First corporate return for a pre-revenue startup and corporate tax help.
• You want a year-end other than December 31: see Fiscal year or calendar year.
• Founders paid costs before the company existed: see Startup costs before launch.
• The books were not started on the first day: see Setting up books for a new LLC and bookkeeping help.
• The company is in California: see California minimum tax and LLC fee.