Taxes are based on a number of factors, like household income. For example, in NYC, the average household income is around $50,711 according to the U.S. Census Bureau. And with the help tax accountants, people can easily file their taxes. But for corporations, filing taxes becomes a little more difficult. Let’s take a look at a few important steps that need to be taken when corporations file their taxes.
Know the differences between S corp. and C corp.: When it comes to being taxed as a business, there are generally two options: being taxed as a C corporation or as an S corporation. A traditional corporation that pays corporate income tax on profits is considered a C corporation. These corporations have “double taxation,” meaning that the corporation’s shareholders pay taxes on their salaries as well. On the other hand, S corporations don’t pay corporate taxes. Instead, the corporation’s incomes are taxed through the shareholder’s personal tax returns. But only certain corporations, like those with fewer than 100 shareholders, can be eligible for S corporation classification.
Keep deadlines and tax rates in mind: Just like personal income taxes, corporations have important deadlines that need to be met. Form 1120, which is the corporate tax form, needs to be filed before the 15th day of the third month after the corporation’s tax year ends. There may be additional deadlines for extensions. Along with deadlines, it’s important to know the tax rate for corporations. Under the Tax Cut and Jobs Act of 2017, the top corporate tax rate decreased to 21% in the 2018 tax year. However, rates may vary based on factors like quarterly estimated taxes.
All business records need to be kept: Proper record keeping is essential for all tax filings. From gathering quarterly estimated taxes to filing at the end of the year, all business records need to be on hand. Important records include business earnings and losses as well as any additional expenses. Fortunately, tax accountants can help businesses of all sizes keep their important records organized for easy tax filing. Having organized records will help make filling out tax forms as easy as possible.
There are more than just a few factors that go into filing taxes for corporations, but these simple steps are a good place to start. If you own, manage, or are a shareholder of a corporation, make sure to talk to your accountant about the upcoming tax filings.