Preparing and paying corporate taxes can be a tricky and involved process, regardless of the industry in which a corporation does business. Managing employees’ payroll, keeping track of your corporation’s expenses, and staying up to date with tax preparation requirements can easily become a burdensome endeavor.
To make sure that your corporation’s finances are under control, use the assistance of the professional and experienced accounting team at Cook CPA Group. Get in touch with them as soon as possible to schedule a free and confidential consultation to talk about how Roseville corporate state tax preparation accountants at Cook CPA Group can help you prepare your corporate taxes with ease and accuracy.
Understanding Corporate Income Taxes in Roseville, CA
The most important state tax that corporations must pay is the corporate income tax. The California state income tax for corporations is imposed on the gross taxable income that a corporation makes. The amount of income tax that a Roseville corporation will pay is determined by the portion of their income that is attributable to California; the business activity that a corporation conducts within the State of California (including property, payroll, and sales) is added together and divided by four to determine the amount of income that will be taxed.
The business structure of a corporation determines the income taxes that be imposed on them. For example, LLCs and small businesses that are classified as S corporations will have both business taxes and personal income taxes deducted from their income by the State of California. C corporations have to pay corporate income taxes at a rate of either 8.84% or 6.65%; the rate depends on whether net taxable income has been claimed.
The taxes that C corporations pay is based on their business’s revenue. However, C corporations also pay taxes based on the personal income of their shareholders and owners. This is known as double taxation. Businesses that are classified as sole proprietorships are taxed based on personal income and are not subject to business taxes.
Other Corporate Taxes
In addition to corporate income taxes, corporations in Roseville must pay other corporate state taxes including employment taxes, franchise taxes, and alternative minimum taxes.
The Franchise Tax Board collects franchise taxes in California. Franchise taxes, like corporate income taxes, depend on the way that a corporation is classified. For example, S corporations pay 1.5% of their net income as a franchise tax. LLCs pay franchise taxes based on whether they are a corporation, partnership, or disregarded entity. Another tax that corporations in California must pay is the alternative minimum tax. This tax is also paid to the Franchise Tax Board and is paid only by certain C corporations and LLCs.
There are also a few types of employment taxes that are paid by corporations in California. Among them is the unemployment insurance tax, which is calculated based on the first $7,000 of each employee’s wages. The rate of taxation for the unemployment insurance tax goes up with time. It begins at 3.4% for the first two to three years of a business’s existence and continues to rise until it reaches the limit of 6.3%.
Another type of employment tax that corporations in Roseville must pay is the employee training tax. Corporations in their first year of business must pay this tax at a rate of 1% on the first $7,000 of taxable wages that each employee earns.
Another employment tax that corporations must pay in California is an employee training tax. Employers in their first year of business are required to pay the employee training tax, which is taxed at a rate of 1% percent on the first $7,000 of taxable wages for each person employed by a corporation.
The third type of employment tax that corporations in California must pay is the state disability insurance and paid family leave tax. This tax is held by employers and paid by employees, and is 0.9% of income.
Deductible Expenses in California
Tax liability can be reduced by lowering the amount of income that is taxed by the IRS, which can be done by deducting eligible expenses. Corporations in California should keep a close eye on their expenses so that they can deduct those expenses on their tax returns; corporations are generally able to deduct advertising, profit-sharing plans and pensions, asset depreciation, charitable contributions, maintenance of corporate assets, and salaries to corporate officers from their taxes.
Tax Credits for Corporations in Roseville, California
Another way that corporations in Roseville can lower the amount of taxes that they pay is by utilizing tax credits. Tax credits are offered as an incentive for businesses to engage in behaviors that are beneficial. One of the most popular tax credits that many corporations are eligible for is the Family Leave Tax Credit, which allows small businesses to provide paid leave to employees who are dealing with family-related issues.
Another tax credit that corporations in California may be eligible to claim is the Environmental Tax Credit, which is issued to businesses that have implemented energy-efficient and environmentally friendly changes. If companies perform research on business performance and product development, they may qualify for the Research and Development Tax Credit as well.
Work with Corporate State Tax Accountants in Roseville
Prepare your corporate state taxes in Roseville with the help of experienced and professional accountants from Cook CPA Group.