Basic guide to corporate tax preparation
In this paragraph, I am going to talk about a few guides when getting your corporate tax preparation done. There are 3 types of corporate categories. Small business, medium business, and large business. As its name suggests, small business has small resources, hold stocks worth of under $1 million.
There’re multiple reasons why someone choose to Incorporate. Such as, protecting assets from lawsuits against the company is one of the key reasons.
Also, getting more work from other companies. Because companies prefer doing business with other companies. This could lead to more income. It is legal for anyone to run several corporations. However, they need to perform legal transactions and not intending to avoid taxes.
What are the charismatics of a corporations?
So, we learned about the benefits of owning a corporation. With this in mind, now back to taxes. Regular corporations report their annual tax on form 1120. Further, most corporation keeps their book based on the calendar year, but this is always not the case. In addition, there are two common methods that I list below.
- Accrual Basis,
- And the Cash Basis.
Firstly, we’ll discuss the Cash Basis technique. Some corporations use cash basis methods. In such cases, they should deduct business expenses in the tax year it was paid off. Moreover, report revenue in the tax year it was received. On the other hand, if your corporation prefers using the Accrual Basis method, it should subtract business expenses when it happened.
What is calendar year in corporation means?
It’s a period that a business owner chooses to file their tax return. There are two types of years, Calendar year and fiscal year. A calendar year is a 12 month period that starts from January 1 and ends on December 31. Additionally, a fiscal year is a 12-month period that can begin anytime a corporation chooses. You can choose this on the first year of filing. This cannot change for the next 5 years of choosing.
Finally, fiscal year could end on any day except the last day of the last month of December. S corporations or LLCs are calendar year taxpayers. C corporations and firms can either select a fiscal or calendar year to file their return. For more questions contact us, so we can help you further.
Information necessary for corporate tax preparation
- A copy of the previous corporation tax return filed with the state, and the IRS.
- A filling receipt you received from the state
- Papers filed and accepted by the Internal Revenue Service. For instace, if the corporation has elected to file as a “Subchapter S Corporation”.
- The company’s federal Employer ID Number (EIN). Usually obtained from the internal revenue service.
- Furthermore, a duplicate copy of your State sales tax certificate.
Business Income for corporate tax preparation
- Interest received on your business investment, savings, and checking accounts during the year.
- Income from other sources earned during the tax year.
- Gross revenue earned from all income sources. For example, 1099 obtained from other companies for the subcontractor’s work. Corporations usually file W-9 to be able to get that.
Expenses & Capital Expenditure
You can deliver and prepare expenses at end of the year. Such statements may include adjusting entries, trial balance, balance sheet, and income statement.
Contact Green Tree Tax Services Houston
When you are in doubt or have any questions regarding your taxes Green Tree Tax is here to help. Not only we have the experience we also, offer a reasonable price. We are sure you will be happy with our services, so we guarantee our work for accuracy.