How to Pay Corporate Income Tax

Everyone has to pay federal income tax, even corporations. The way your corporation will pay its taxes depends upon the specific type of corporation you have. Most corporations are considered "C-type" corporations, and these corporations must pay their federal taxes directly from corporate accounts. "Type S" corporations are more like limited partnerships, so the owners or partners each personally pay taxes for the corporation.

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• Quarterly corporate financial statements
• Income-and-expense statements
• IRS form 1120 (all schedules are included)
• Balance sheets

1. Calculate your corporation's income for the past tax year by gathering and tabulating your quarterly financial statements.
2. Obtain a copy of IRS form 1120.
3. Fill in the name of your corporation, the address for your corporate offices, your employer-identification number and the date of incorporation. This goes on the first page of form 1120.
4. Gather information about corporate expenses that may qualify as deductions. Retrieve corporate-executive salary statements, documentation of salaries and wages paid to other employees and data concerning payments to employee-benefit programs. Enter this information on form 1120.
5. Retrieve income paperwork, such as the amounts for the corporation's total gross receipts, cost of goods sold, gross profits and dividends. Enter this information in the "Income" section of form 1120.
6. Subtract the total deductions from your corporation's total income and write the number on form 1120. Write it on the taxable-income line.
7. Consult the corporate tax rate form. Locate your corporation's total income on the tax rate chart to find the amount of tax owed. Include this number on the appropriate line on form 1120.
8. Fill out schedule K. Enter the name, employer-identification number and maximum number of shares of any business in which your corporation has purchased more than 10-percent interest.
9. Gather information about any dividends the corporation paid to shareholders in the previous year. Fill out schedule C with this information.
10. Enter information about your company's assets and liabilities in schedule L. You will need information about corporate cash, real-estate holdings, investments, securities and loans.
11. Instruct a corporate officer to sign and date form 1120. Include a check for any tax owed, and mail the entire form and schedules to the IRS.

Tips & Warnings

• Consider estimating your corporate tax and paying it quarterly during the year, spreading out your tax payments over the preceding year.