Corporate tax filing is complex, time-consuming and requires a thorough understanding of business entity classification, reporting requirements, and federal and state income taxes. A comprehensive strategy is critical to ensure that your company complies with all reporting and taxation obligations while maximising available deductions and credits. As rules and regulations continue to evolve at all levels of government, staying ahead of changes in corporate tax filing is essential to avoid costly errors that can trigger an audit.
Whether your company is an S corporation, C corporation start your success story or non-US corporation, you must file federal, state and local returns in order to meet reporting and taxation obligations. If you fail to file a return, you could face penalties that range from interest and fines to losing your right to do business in the state or municipality in which you operate.
A tax return is an annual form that corporations, partnerships and trusts must file to report profits, losses and deductions to the US Internal Revenue Service (IRS). The return includes detailed information about profit and loss, assets and liabilities, officer compensation, accounting method, and more. It also contains various schedules that provide information about costs of goods sold, depreciation, prepaid expenses, interest and taxes paid, dividends received, and other items.
In addition to the corporate tax return, many companies are required to file state and local income and sales and use taxes. Companies that have nexus in multiple states are particularly challenged because of the differing tax rates and forms for each jurisdiction.
To file a state tax return, your corporation must have a valid certificate of authority to do business in the jurisdiction where it operates. It must also have an address in the jurisdiction and a registered agent. The tax return must include the name and address of the corporation, its tax year, a brief description of the corporation’s business in the state, and statements as to the number of authorized and issued shares.
Corporate taxpayers are allowed to reduce taxable income by deducting necessary and ordinary business expenditures. These include investments in property such as real estate or stocks, insurance premiums, travel expenses, bad debts, interest payments, taxes on fuel and excise, and legal services, among other things. Corporations are also able to deduct employee salaries and wages, health and dental benefits, tuition reimbursement and bonuses.
Corporations that choose to make an S corporation election must file a federal tax return using Form 1120 and must also file state income taxes with the applicable state’s department of revenue. State due dates for corporate income tax filings are often one month or more later than federal filings, allowing corporations more flexibility.
As the economy grows and tax rules change, corporate tax filing can be challenging for even the most seasoned professionals. Keeping abreast of new developments, filing deadlines, and exemptions is imperative for any business seeking to remain compliant. Bloomberg Tax’s extensive resources and expert analysis, news, practice tools, and industry events can help you stay current and confidently prepare, file, and pay taxes on time.