The Congressional Budget Office estimates that the federal government intakes $370 billion dollars in tax revenue. According to corporate tax law, every company in the United States that produces revenue is required to file a corporate income tax return.
Corporations are responsible for tracking their annual revenue and expenditures to submit their annual tax filing. Keep reading to learn about how to best manage your business finances and submit your annual corporate taxes.
What Is Corporate Tax Law?
Corporate tax law is a set of rules and regulations used for taxing incorporated businesses and not-for-profit charities. Corporate taxes are the taxes that the government requires based on the profits of the business. Taxes are paid based on a company’s taxable income and revenue minus operational costs.
Different Corporations Responsibilities
Although every company must file a corporate income tax return, limited liability companies (LLCs) are not responsible for paying federal taxes. The two primary groups that must file tax returns are S and C corporations. You can clarify your corporation status by contacting the IRS directly.
S Corporations
S Corporations are any corporations that may pass income between shareholders. These corporations do not have to pay federal taxes and are usually associated with small businesses. The “S corporation” classification gives you access to tax-exempt privileges.
C Corporations
The legal structure that is created around a C corporation has the owners or shareholders of the business file separately from the entity. These businesses are usually double taxed, as they are involved in both corporate and personal tax filings.
Keep Track Of Tax Deductible Expenses
The IRS waves the taxes levied on the operational expenses of a business. This sum of operational expenses is subtracted from your business’s gross revenue on your tax form.
For corporations, keeping track of your tax deductions is a great way to optimize your financial situation. Bookkeepers for hire can sift through your business’s incoming and outgoing expenses and keep track of your tax deductions. Investing in a bookkeeper can help your corporation keep your finances organized in preparation for tax season.
Submit Your Estimated Taxes To The IRS
With the help of financial advisors and organized bookkeeping, you can make an informed estimate of your necessary taxes to pay based on your net earnings for the year.
When it comes to submitting your taxes, S corporations will only pay an estimated tax on their built-in gains is greater than $500. This provision is put in place to help small businesses grow by giving them tax breaks.
File Your Tax Returns By Their Deadlines
The type of tax return you will submit will vary based on your corporation status. S corporations will be filing Form 1120S and a K-1 form, while C corporations only need to file a Form 1120. This paperwork paired with your estimated taxes will meet the IRS’s annual tax requirements.
Federal, state, and local taxes have their own submission systems and deadlines. Using tax calendar software can help you keep track of the relevant submission deadlines as they approach.
Master Corporate Taxes
If you fail to submit your annual corporate taxes, your business could be in serious trouble with the IRS. By enlisting financial experts and gaining an understanding of corporate tax law, you can ensure that your corporation is protected from IRS investigations.
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