How to Prepare Your Corporate Tax Return

Tax Day for corporations is March 15.

Corporations are required to file tax returns each year by March 15 unless they file for an extension. Limited liability corporations are not taxable. Corporations must keep adequate accounting records to complete their return, which is used to determine the corporation's tax liability.

Instructions

1. Close your books for the year, making closing and adjusting entries. Produce your year-end financials, that is, a statement of profit and loss and a balance sheet as of the last day of the year. If you are on a calendar year, that will be Dec. 31. If you are on a fiscal year, it will be the last day of the IRS-approved fiscal year. The profit-and-loss statement and balance sheet form the basis of your corporate tax return.

2. Determine the forms and schedules you must file. For example, file Form 1120 for a C corporation, Form 1120 S for an S corporation, and Form 1120 F for a foreign corporation. In addition, there may be numerous other supporting forms and schedules that must be filed as part of the tax return. The best place to start is with the prior year's return and the instructions for that form for the current year. in other words, assume you will file the same type of return unless there has been some drastic change. From the review, compile a list of forms and schedules that are likely to be filed.

3. Gather and organize your records, no matter who prepares the return. You will need at a minimum: last year's return; information on the accounting method you use, either cash or accrual; tax ID number; NAICS classification; balance sheet as of the end of the year; profit-and-loss statement for the tax year; business asset records; mileage records; inventory records to calculate cost of goods sold; and basic information on the corporation such as date of incorporation and date of S corporation election.

4. Complete the return using either the fill-in forms, tax-preparation software or by hand. IRS fill-in forms can be downloaded and saved as PDF files or filled out online and printed. If you fill in a form online, print it immediately because the form will not save your data. Keep the instructions handy. You will need them to determine the correct information for each line on the return. Tax-preparation software will walk you through the return with the instructions built in to the program.

5. Review the completed tax return for accuracy and completeness. When you are satisfied, fill out the signature section, and sign and date the return. You can either e-file the return or mail it. If you e-file, you must get an acknowledgment from the IRS before the submission process is considered complete.

References

• IRS: Forms and Publications