Atlanta CPA Helping Business Owners File Their Corporate Income Taxes
Atlanta CPA Helping Business Owners File Their Corporate Income Taxes
www.HisCPA.com
The proper and timely fling of a Corporate Income Tax return is not for the ill equipped and those who are not prepared. A return, though seemingly a fill in the blank experience is fraught with obstacles for those who are not Certified Public Accountants. This outline will give business owner a feel for the returns to be filed and the data to be supplied. Typically tax returns for incorporated business’s will file either a:
Form 1120S: For S Corporations
Form 1120: For C Corporations
Form 1065: For Partnerships (whether incorporated or not), LLC’s and LLP’s.
Though because of tax nuances and there will be reporting differences between the exact reporting of each return, these general guidelines will allow readers to gain a good understanding of the information to be displayed and reported. Below are a listing of items to be generally reflected on all returns and some of the differences between the different entity types and reporting. Selection of entity type will be a key determinant in not only how the business operates, how it is taxed, and what forms are used for financial reporting. A CPA at the earliest stages of a business developing is critical to ensure a wise and judicious choice.
Federal ID Number. Corporations are specifically identified by their Federal ID # which is used on most, if not all, income and payroll tax reporting. The SS-4 is the form, which a business owner can utilize to get an ID number for their business. A corporate Federal ID # (like an individual’s Social Security number) is for that corporation only and is not transferable to another or new corporation.
Business Activity Code. This is the business classification code that the IRS uses to classify business according to type and is indicated typically on page one of the return.
Accounting Method. Companies are required to indicate the method of accounting that a return is prepared on the basis of, whether it be cash, accrual, percentage of completion, or completed contract. Acknowledgement of this method on the first return will generally determine the accounting method of future returns and will also substantially affect the tax bill to be reflected.
K-1’s. A Form K-1 is attached to all Partnership Returns/Form 1065 and S Corporation Returns/Form 1120S and reflects each owners respective share of profits. If you add or delete a partner during the year then the business has the option of allocating profits/losses to each owner based either upon the Days of Ownership or Actual Operating Results based on the days the stock was actually owned.
Tax Preference Items. Certain tax items for S Corporations and all Partnership Returns are reflected as “pass through” items on each owners respective K-1 and then are to be reflected on an individual owners personal return. Common pass through items include interest income, charitable contributions and Section 179 depreciation.
Non-Deductible Items/Permanent Tax Differences. Typically on page four of a C or S Corporation Return or a Partnership returns items that are not tax deductible are reflected. These typically will include items such as shareholder/member distributions, fifty percent of meals & entertainment, and penalties.
Calculation of Tax Profit. You are allowed, if you are a small business as determined by IRS definition and do not carry inventory, to keep your internal books on an accrual basis while filing your tax returns on a cash basis. Timing differences of items are adjusted when converting accrual based internal books to cash based tax returns. Examples of timing differences are accounts receivable, accounts payable, and other accrued expenses.
Balance Sheet. The Balance Sheet as listed on the tax return is best presented on the same basis as the profit and loss prepared on the basis of reporting as detailed above when determining the calculation of tax profit.
Reporting Corporate Income Taxes to the State of Georgia
Form 600 is the Georgia State Form for reporting of income taxes due GA for C Corporations.
Form 600S is the Georgia State Form for reporting the net worth taxes due GA for S Corporations.
Form 770 is the Georgia State Form for reporting the net worth taxes due GA for Partnerships/LLC’s/LLP’s.
Getting a good Atlanta CPA to help with your tax issues is your best first step to obtaining sound business and tax advice helping to ensure the likelihood of your business succeeding.
Contact John Dillard CPA of His CPA at 770 814 9304 and visit www.HisCPA.com
At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”
We advise clients on: IRS representation, Offer in Compromise, Incorporation in GA, Corporate and Personal Income Taxes, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.
We serve clients that are located in Atlanta GA, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond.
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