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A Tax Guide For C Corps
A Tax Guide For C Corps
When it comes to starting a business, there are a lot of decisions to make. One of your biggest is which entity is right for your business. Once you’ve chosen an incorporation structure and established your entity, you’ll need to focus on one important topic: taxes.
Each entity has its own tax filing requirements. Partnerships use Form 1065, LLCs file their taxes on their personal income tax return, S Corps use Form 1120-S and NPOs and sole proprietors have their own requirements. Although C Corps and S Corps are both corporations, they have different tax forms.
Like anything tax-related, C Corp taxes are complicated and require attention to detail. The most important thing you’ll need to know about C Corp taxes is the 1120 tax form. We’ll cover everything you need to know about Form 1120 and how to properly fill it out.
Table of contents
Income tax and C corporations
Form 1120 is the tax form used by C Corporations and LLCs filing as a corporation to report profits and losses, tax deductions, credits and income. This form is also used to figure out the business’s tax liability. You can think of the 1120 form as the C Corp equivalent to the 1040 form. Or the 1099 tax for freelancers.
C Corporations are taxed at a corporate rate set by the Internal Revenue Service (IRS). In most cases, C Corporations pay taxes on a quarterly basis. A quarterly tax calculator is just the tool for this.
There are different types of Form 1120 for specific organizations. But Form 1120 is the only form you’ll need to worry about for a C Corp business.
Who files tax form 1120?
Every corporation that does not elect to be an S corporation is required to file Form 1120. Also, LLCs that elect C Corp taxation are required to file too.
Basic information about tax form 1120
Since Form 1120 can be complicated, certain sections require extra attention. It’s a good idea to look over the 1120 tax form before you fill it out to be sure you have all the information on hand.
Business details
Income
Deductions
Payments and credits
Cost of goods sold: Schedule 1120-A
How to file the 1120 form?
You have the option to file the form by mail or file electronically. Filing electronically is faster and saves you from filling out paperwork, and the IRS has an efiling service. If your C Corporation reports $10 million or more in assets, you’re required to file electronically.
Tax form 1120 due date
The due date for the 1120 form is April 15. If you need to file an extension of time, you’ll need to fill out Form 7004, extending your deadline to September 15.
1120 tax form and penalties
Filing Form 1120 late will lead to penalties from the IRS. There’s a penalty of 5% charged for each month the tax payment is late and the maximum penalty is 25% on the unpaid amount.
If Form 1120 is over 60 days late, you’ll be charged $135 or the smaller of the tax due. You’ll also be charged monthly interest on the unpaid tax amount.
If you don’t owe any additional taxes, the C Corp won’t be charged penalties for not filing Form 1120 or missing the Form 1120 filing deadline.
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