S Corp Election with just Expenses

[tbamaze]

I have a new client that asked me to amend last year's 1040 because they did not include business expenses when the previous person completed the return.  I assumed it was an LLC and Schedule C was needed. I am new to business returns with experience with just completing Schedule C.  

After further discussion the business has an S Corp election (started in 2020 but never had business activity until 2022). With an S Crop election can a Schedule C be completed or is 1120S the only option?

The client does not have a balance sheet just expenses and no income.  Can 1120S be completed without a balance sheet?  

[sjrcpa]

 Yes 1120S is the only option.

No you can't complete a corporate or partnership or nonprofit return without a Balance Sheet/trial balance.

If there are only expenses and no income, has the business really started? Could the expenses be start up costs?

[qbteachmt]

"With an S Crop election can a Schedule C be completed or is 1120S the only option?"

Corporations are their own entity. There is no Owner; your taxpayer is a shareholder-employee. We form corporations to gain the benefit of this separation from self, which is different than a Sole Proprietorship or Single-member LLC (both of which file Sched C). That separation needs to be respected. There's still time to make sure your taxpayer knows about their payroll requirements; we see a lot of errors regarding that part of corporation operation.

[NodeCfo]

If they are an LLC getting taxed as an S-Corp and they filed an 1120S, you have to amend the 1120S to get an amended K-1 before you can amend their personal returns. You can not file a Schedule C for that business if they are an S-Corp.

You can technically (not good accounting) complete an S-Corp return without a balance sheet if they meet the parameters for it - i.e. they have less than $250,000 in assets AND net receipts. That being said - I NEVER file a business return without a balance sheet. Just because the IRS doesn't require it for a small business doesn't mean that it doesn't exist. Every business has a balance sheet if their accounting is being done properly. 

[tbamaze]

Does K-1 for Shareholders automatically generate when completing an 1120S in Proconnect?

[sjrcpa]

Provided your input is correct re shareholder, ownership, etc.