“… nothing is certain except death and taxes” – Benjamin Franklin
Every business and virtually every citizen needs to file at least one annual tax form with the IRS, and most also have one or more filings with their state’s department of revenue. Timely and accurate filings with these organizations will decrease costs, avoid penalties and interest, and prevent unforeseen surprises from failures to file. Tax returns are required quarterly or annually, depending on the form. All businesses and individuals with tax liability have to fill out a return, and timely filing is the best way to stay out of trouble with the IRS and your State. We file tax returns, where needed, in all 50 States and the District of Columbia.
Most Common Tax Returns
- S-Corporations (1120S Tax Returns)
- Partnerships & Multimember LLCs (1065 Tax Returns)
- C-Corporations (1120 Tax Returns)
- Individual Returns (1040 Tax Returns)
- Estate Trust Returns (1041 Tax Returns)
- Individual Non-Resident Returns (1040NR Tax Returns)
Tax returns themselves are straight-forward if your records are in order. As a result, we offer combination bookkeeping/tax return packages where we stay on top of your books all year and file your return at year end. For others that do their own accounting, we file returns and plan a mid-year strategy session to keep you on track. If you only look at your financials and tax situation annually, you may be passing up tax credits, tax deductions, or better business decisions.
Business Tax Filings
Businesses fall into three basic categories from a tax perspective: sole proprietorships, partnerships, and corporations. The legal entities vary from state to state, and increasingly firms are organized as LLCs (Limited Liability Companies), but ultimately your business will have to file under one of those three categories.
Annual Federal and State returns for corporations, small businesses, and business owners. Make certain your 1040, 1120S, 1120, 1065, or 1099s are completed on time, accurately, and in compliance with IRS regulations.
Corporate Tax Filings
Corporations have been in America since Colonial times, and are structured to separate their owners (shareholders), from management (officers), and employees. Originally the only form of limited liability, corporations are just one form of business today. American corporations fall into two categories, S-Corporations and C-Corporations. Most owner-operated small businesses operate as S-Corporations, a form of “pass through entity,” while public companies, those with external investors, and foreign owned corporations operate as C-Corporations.
C-Corporation Tax Returns
C-Corporations, the default corporate status, files a form 1120 annually, the corporate tax return. The corporation is responsible for taxes on it’s income. These rates vary over time based on congressional action, but are distinct from those of the owners. C-Corporations may retain their earnings to reinvest, or pass them to their shareholders, who pay taxes on them based on the information provided in 1099-DIV. C-Corporations have the advantage of isolating the owners from business, and the drawback of increased complexity.
S-Corporation Tax Returns
In addition to your S-Corporation filing its 1120S return, its owner or owners will receive a K-1 reflecting their share of the company’s profits. That K-1 is incorporated into their personal tax return, a 1040.
S-Corporations have the advantage of allowing owners to designate some of their income as payroll (subject to FICA), and some as profits (not subject to Self Employment Taxes). Failure to run Payroll for an S-Corporation can have numerous problems, so setting up your compliance early is important.
Partnership Tax Filings
Partnerships, including multi-member LLCs (Limited Liability Companies), file a 1065 Tax Return for Partnerships. After completing the business accounting, the entity files its own 1065, and then generates a K-1 for each owner, whether an individual or another business. Particularly when you end up with nested LLCs owning each other, the flow of K-1s and the levels of phantom income become serious concerns. Having a knowledgeable tax firm can help you navigate this, maximizing your legal protection and minimizing your tax obligations.
Individual Tax Filings
Individual Tax Returns fall into two main categories, and one related category. Individuals files a 1040, either individually or jointly with their spouse. Americans living abroad file a 1040NR – Non Resident Return, establishing if they have any tax liabilities. And when one passes, their estate must often file a 1041 Estates and Trusts Returns.
Small Business Returns – Schedule C
Businesses that are setup as sole proprietorships use a form called Schedule C. In a Schedule C business situation, the owner receives the business incomes as normal income, then offsets it with the deductions on Schedule C. This should result in roughly the same setup as a S-Corporation with its expenses, but with difference regarding self employment taxes and other areas of concern. Single member LLCs being treated as disregarded entities also end up with this method.
We live in a global economy. Many foreign individuals and companies want to do business in the United States. These individuals and companies have complex filing requirements with big penalties when they are missed. It is important that you report foreign bank holdings, foreign income, and foreign taxes paid. These forms are straight-forward to firms that do international tax work, but may catch your CPA by surprise if you use a small neighborhood tax accountant. The penalties for these filings are so extreme- tens of thousands of dollars- it is very important that you comply.