Corporations filing federal taxes have to consider many relevant factors while maintaining the day-to-day activities required for a successful business. Keeping track of so many disparate things may be difficult for some companies, which is why it is recommended that you use the help of an experienced federal corporate tax accountant.
The federal corporate tax accountants from Cook CPA Group are available to assist any corporation in the Sacramento area with their federal corporate taxes. Cook CPA Group recognizes that navigating the complexity involved in taxes can be difficult and that many business owners welcome support on this front.
Preparing to File Federal Corporate Taxes in Sacramento, CA
Corporations are taxed as their own legal entity, separate from the owners of the company. To pay their taxes, a corporation must use IRS Form 1120, the U.S. Corporation Income Tax Return. The corporate income tax rate is different from the personal income tax rate. Since the Tax Cuts and Jobs Act of 2017, the corporate tax rate has been 21% (prior to the bill, the federal corporate tax rate was 35%).
To ensure that your taxes are filed correctly in Sacramento, you will need to have certain information about your business prepared beforehand. When you file your federal corporate tax returns, you will need to have the name and address of your corporation, your employer identification number, and details about the assets attached to your corporation readily available. You should also have information about your corporation’s income on hand. The cost of the products sold by your corporation, the dividends issued to shareholders, gross receipts, and various other financial documents should be available as well. A federal corporate tax accountant can help determine which documents will be needed to file your return.
Deductions and Credits on Federal Corporate Tax Returns
Claiming tax deductions can lower a corporation’s overall tax liability by reducing the amount of income that can be taxed by the IRS. The deductions that corporations can claim include salaries paid to corporate officers, maintenance of corporate assets, contributions to charities, asset depreciation, pension plans, profit-sharing plans, and advertising and marketing.
Corporations can also lower their liability by claiming tax credits. One of the credits that corporations claim most often is the Family Leave Tax Credit, which allows small businesses to provide paid leave to deal with family-related issues. Another frequently claimed credit is the Environmental Tax Credit, which is given to corporations that implement changes to make their business more energy-efficient and environmentally friendly. The Research and Development Tax Credit is issued to businesses that conduct research involving product development, business performance, and payments to researchers.
Paying Estimated Corporate Taxes
Instead of paying taxes once annually, corporations may pay their taxes once per quarter; these are known as estimated corporate taxes. Businesses can figure how much to expect to pay in estimated corporate taxes by subtracting the taxes they expect to have withheld and tax credits that they are planning to take from the amount of taxes that they expect for the entire year. If a corporation owes at least $1,000, they will have to make estimated tax payments.
The amount that a corporation will have to pay in estimated taxes depends on whether the corporation is a C corporation or an S corporation; S corporations are taxed at a rate of 1.5% of their income, while C corporations are taxed at a rate of 8.84% of the income they make within a year. Corporations can use Form 1040-ES to file their estimated corporate taxes. Completing this form will require figuring out adjusted gross income, taxable income, and claimed credits for the year.
Businesses have a few options when it comes to figuring out how much they owe in estimated taxes. However, there are two that are more frequently used than the others. The first one entails simply paying 25% of the income tax that will be shown on the business’s return for the year. The other popular method for paying estimated taxes is to pay 25% of the income tax shown on the return from the previous year.
Sacramento corporations should expect to pay their taxes on four different dates over the course of the year; these are usually April 15, June 15, September 15, and January 15. If those dates fall on a weekend or holiday, taxes can be paid on the next business day. Businesses are also able to file for extensions for their estimated tax payments using Form 7004. Corporations can consult Publication 505 (the IRS guide to Tax Withholding and Estimated Tax) to learn more about paying estimated taxes.
Accountant Available for Federal Corporate Tax Preparation in Sacramento
If your business or corporation could use assistance with your federal corporate taxes, get in touch with the experienced Sacramento federal corporate tax accountants at Cook CPA Group. The professionals with Cook CPA Group possess decades of accounting experience that enables them to help businesses and corporations in all industries file federal corporate taxes accurately and efficiently.