Of course, the calculation isn’t always so simple, so you and your tax professional should check the Form 1120 instructions for exceptions and further details. Line 2, “income tax,” is where you multiply your taxable income - page 1, line 30 - by the 21% federal corporate tax rate. You go to Schedule J to enter business tax credits and estimated tax payments to arrive at your tax liability. The section picks up on the tax calculation you started on the first page of Form 1120, which lists your deductions. Source: Here’s where you calculate your C corporation’s tax liability. You enter your tax credits on Schedule J. The deduction calculation depends on the amount of another corporation your corporation owns. Through the dividends received deduction, C corporations can write off a percentage of dividend income. C corporations report their annual dividend income from investments in other companies on 1120 Schedule C. Schedule CĬ corporations, just like people, can buy stocks in different companies. You'll need to fill out these schedules when filing tax Form 1120. You’ll have blanks for cost of goods sold, depreciation, gains and losses, tax credits, and all total lines. You can fill out much of this using information stored in your accounting software. Fill out most of page 1Ĭalled the face of Form 1120, the first page gives the IRS a glance at your company’s tax situation. Just make sure you’ve identified a corporate tax expert who’s ready to answer questions and take over if needed. You may be tempted to file Form 1120 by yourself for a small, uncomplicated C corporation.
Many common tax software companies, like TurboTax, have software options for C corporations.įorm 1120 is infamously long-winded, so engage a tax professional to help you complete Form 1120. Owners of C corporations - called shareholders - aren’t considered self-employed, so they can’t use self-employment tax software. Start the filing process by gathering your tax team, which should include a corporate tax professional and corporate tax filing software.
How to file tax Form 1120 for your small business 1. Accurate year-end account balances, which you can get from your accounting software.A list of business deductions with supporting documents.Tax credit forms you’re planning to file this year.Your employer identification number (EIN).C corporation that doesn’t elect S corporation taxationįollow our small business tax preparation checklist before filling out business tax Form 1120.
You have to file Form 1120 if your business is a(n): S corporations, a pass-through entity type, file information return Form 1120-S. If they meet IRS requirements, businesses registered as C Corporations can elect S corporation tax status by filing Form 2553. If they waive pass-through taxation and elect C corporation taxation with Form 8832, they’re required to file Form 1120. If you registered your business as a C corporation or limited liability company (LLC), you might have to submit Form 1120.īy default, LLCs are taxed like sole proprietorships or partnerships, depending on the number of owners. Source: Who has to file Form 1120?Īny organization taxed as a C corporation must file Form 1120. Most pass-through entity types also file information returns to detail business earnings to the IRS, but it’s not for taxpaying purposes.įorm 1120 has a reputation for being complicated, so identify a tax professional to help you file. There’s no flat tax rate for other types of business income: Your tax rate is bracketed based on your income level. Pass-through entities, such as sole proprietorships and partnerships, pay no entity-level tax and pass on their income tax liability to their owners. If your business isn’t taxed as a C corporation, it’s considered a pass-through entity. Taxable income is the difference between a C corporation’s income and its business tax deductions, losses, and credits. Unlike other business structures, companies taxed as C corporations pay a flat 21% corporate tax rate on taxable income. Think of Form 1120 as the C corporation equivalent to personal tax Form 1040. If your business is taxed as a C corporation, Form 1120 is the return you must use.īusinesses taxed as C corporations file their business tax return with IRS Form 1120.
Your business type determines not only what legal and financial protection you get, but also how you file small business taxes. Choosing your business type is one of the first and most important decisions you’ll make as a small business owner.