Can I consider myself Sole Proprietor

[michaerlscai]

I formed a LLC this year (2008) for a website I built. I spent much of 2007 working on the website, paying for other people, can i consider myself a 'sole proprietor' for 2007 so I can claim losses for the money I invested on my website for 2007? I did not formally form a 'sole proprietory' business with the state of arizona where i live.

 

[DStaub]

You don't need to file a form to be sole proprietorship (there may be assumed name filings or local business license requirements, but those are another question). There is no entity; it is just you.

Be aware, however, that if you didn't commence operations until 2008, your 2007 expenses probably fall into the category of "start up expenses" which must be capitalized and not deducted until the business begins. After the business begins, you can deduct up to $5,000 of the start-up expenses in the first year (subject to certain limits) and amortize the remainder over 15 years.