Corporate Tax Preparation

Written by:

Michael Green

Corporate tax preparations are done differently from other regular businesses. They have a separate taxpayer entity. The corporate tax preparation has special deductions and taxation forms. However, most small corporations are free to choose how they will be taxed.

Corporate Tax Preparation

The reason why corporations are taxed differently from others is that shareholders own them. First, the corporation will pay taxes on the income earned, and then the shareholders will be taxed on the dividends they earn. 


A corporate tax comes from corporate profits. Before making any preparation and making decisions on your taxes, it’s essential to familiarize yourself with basic corporate tax preparation guidelines for filing corporate income taxes. 


Before You Prepare Your Tax Return


To file the corporation taxes, you must produce financial reports and other business documents to the person preparing your taxes. It may include information on dividends, goods sold, and other aspects that operate a corporation. Any business that fails to comply with taxation requirements and reporting are penalized. They will get the penalties from interest and fine to loss of corporation rights to be in existence. 


It would be best if you learned the corporate tax deductions.


Despite the basic business expenses that other small businesses deduct, corporations will also deduct the employee bonuses and salaries, cost of retirement plans, and employee health insurance before it is taxed. 


These are the deductions that every corporation should keep in mind to offer enough information on how to maximize the tax savings. 


How to file corporate income tax.


You can either file your corporate tax return via mail or do a corporate tax preparation via e-file. Generally, a corporation should file returns and tax payments to the state of incorporation, the federal government, and localities and states whereby businesses are transacted. 


Corporations are responsible for collecting specific taxes paid by other corporations and remitting the collected tax to their federal government.


Here are two ways to file tax returns: 


How to file the federal tax return.


The tax return you file will depend on whether you are a C or an S corporation. If you are an S corporation, you will file Form 1120S to show your income, losses, and expenses. At the same time, you file a Form K-1 for every corporation’s shareholders. The form should show their share of the corporation’s income, credits, and deductions. 


After that, provide the shareholders with the K-1 form copies to report their corporate income or personal income tax returns loss.


On the other hand, C corporation files a corporate income tax return on Form 1120. After which, shareholders report the dividends received from the corporation through personal tax returns.


Filing state tax returns


This form of taxation will depend on your corporation’s location and the status of your tax. You might as well file your state tax return for the corporation.


Usually, a corporate tax rate is a flat percentage varying from state to state. Any business registered in any additional state will need a state tax return for the corporation and its shareholders. 


Corporate tax preparation might be confusing. It’s great to ask for advice from professionals before taking any step. It would be best if you did this before you select any corporation tax status or tax preparation. You should understand the consequences of S corporation or C corporation taxation, maximize the tax deductions, and prepare for your tax return.


Paying the Corporation Taxes


Corporations are supposed to pay the estimated taxes according to their tax bill. In the US, the anticipated tax bill is from $500. They get to calculate and file the given taxes on an IRS Form 1120-W. Any corporations that fail to pay the estimated tax returns in a given time are subjected to penalties and interest for underpayment.


Get a professional for Corporate Tax Preparation.


Corporate tax preparation for both S corporations and corporations can be complex. Often getting assistance from a tax professional or a CPA who has experience in corporate taxes can give you a chance to focus on your business more. Attempting to prepare a corporate tax return will use much of your time, and you might end up losing your business income. 


Before getting any help from the USA CPA Service, ensure to review the essential information regarding the tax preparation for corporations. 

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