A corporation is required to file tax returns with federal, state, and local (and often international) governments. These taxes are based on the corporation's profits and expenses, and the net result determines how much the company must pay in taxes. The filing process requires detailed information on company profits and losses, stockholder distributions, officer compensation, accounting method used, business type, NAICS classification number, balance sheets, reconciliations of income and loss, and more. Failure to comply with reporting and filing requirements can range from fines to involuntary dissolution.
In addition to filing tax returns, corporations are generally responsible for collecting taxes paid by employees and customers and remitting them to the proper government agencies. In addition, corporations that conduct international business must follow specialized rules and procedures for paying and filing corporate taxes abroad.
Corporate tax filing services help companies view more with all of the complex tax and reporting obligations they face, including determining which entity structure is best for the company, helping it to obtain appropriate federal and state business tax deductions, and filing the correct forms. The services provided can also help companies manage the taxation consequences of changes in business plans and investment strategies, and identify potential errors in previous year returns that may trigger an audit.
Tax professionals use tax preparation software to prepare, e-file, and deliver the results of tax returns for their clients. These tools automate and streamline the process, allowing users to complete a return in minutes, with fewer errors than paper documents. They can also provide detailed reports to clients that show the results of the filing and identify any issues or trends.
Many companies choose to outsource their tax filing services, which can reduce the time and expense of preparing and filing returns. A reputable firm can ensure the filings are complete, on time, and accurate. The service can also help the client stay compliant with the IRS and other federal, state, and local agencies.
The federal tax system imposes an annual tax on most businesses, known as a corporate income tax or C-corp tax. Depending on the tax status and location of the corporation, other types of taxes may apply. Typically, corporations must file an information return with the IRS by the 15th day of the fourth month following the close of the tax year. If the due date falls on a weekend or legal holiday, the return must be filed by the next business day.
A state tax may be imposed on the operations of a corporation within the state, which is usually based on a percentage of gross revenue. Similarly, some states may require corporations to file state income tax returns for the company or its shareholders.
The state of Connecticut requires all entities that are subject to the corporation business tax to make estimated payments in four installments each tax period. To file these payments, individuals and corporations must visit myconneCT and submit their returns and estimated payment using an electronic payment method. Individuals and corporations wishing to pay by ACH credit must consult with their banking institution for guidelines.