Congratulations, you just started a business. I know you are proud of yourself and all your accomplishments. As you ramp up the end of the year sales and get ready for the new year, there are some things you must do. Among the top is preparing for tax season. As a new owner or someone who’s venturing out on their own for the new tax season, there’s a learning curve. If you are a C-Corp owner looking for tax, help look no further for tax planning basics you need to know.
Before filing, you need to have the right paperwork to submit. Each type of business has a unique form they will need to fill out and file. C-Corp owners will need to fill out tax form 1120. In this form, you will calculate your federal income tax and list your business expenses and gains. Make sure you have all your business receipts and statements handy to fill out your form. It helps to stay organized throughout the year, so everything is together come tax time.
In light of the new tax codes, C-corps now enjoy a new corporate tax rate of 21 percent as opposed to 35 percent, meaning significant savings. Another advantage is that shareholders that serve as employees can fully deduct their portion of payroll taxes. Additionally, C-corp members can deduct 100 percent of their medical reimbursement plans, disability insurance, and healthcare premiums for their employees as long as the benefits are offered to everyone. They can also decide when their fiscal year ends and begins, allowing them to carry losses over multiple years, and write off up to 10 percent of their taxable income charitable donations as a business expense.
If you become unsure of how to file taxes as a C-corp you can always consult a CPA. Combined with their understanding of tax law, you can learn tax planning basics to get the job done.