Tips for preparing for the S Corp deadline (March 15)

Tips for preparing for the S Corp deadline (March 15)

Tips for preparing for the S Corp deadline (March 15)

If your business is established as an S company, you may be familiar with the S company tax deadline on March 15. This is the tax deadline for company S to submit annual tax returns. The March 15 deadline will be the same as the 2021 S Corps tax filing deadline. (This tax filing deadline will only be changed when March 15 is a weekend or holiday.)

What is an S company? What does it mean to choose S Corp status? Do you know what documents the entity needs to file tax returns? Let’s take a look at how to prepare for the S Corp tax filing deadline.

What is an S company?

An S company is a company with a “pass-through” entity.

Company income, losses, deductions and credits may be passed on to shareholders. These shareholders report the company’s taxable activities on their personal income tax returns. In return, the company does not pay federal and state income taxes. S Corp is legally able to avoid so-called double taxation.

S company benefits

When filing taxes as entities such as limited liability companies (LLC) and corporations, choosing S Corp status is usually a popular choice. In addition to passing taxes, the formation of S Corp also provides entrepreneurs with limited liability protection and separates personal assets from professional assets.

READ MORE:  What are fixed fees and why are they important?

The S Corp election also reduced the self-employment tax burden. For example, the shareholders of S Corp can act as employees. Shareholders, who are now employees, receive wages and dividends, which help reduce self-employment taxes.

S Corp qualification

Think your company is capable of choosing S Corp status?According to the IRS, you need to meet S Corp eligibility requirements. This includes ownership standards as well as stock standards to meet the eligibility of the S company.

  • The company must be registered as a domestic company.
  • A registered agent service must be designated for the company.
  • The company’s shareholders shall not exceed 100.
  • The shareholders of an enterprise must be individuals. Non-resident foreigners may not become shareholders.
  • The company must own a single class of stocks.
  • Finally, the company may not be an unqualified company. As stated by the US Internal Revenue Service, this includes certain financial institutions, insurance companies, and domestic and international sales companies.

Is your company eligible for S Corp status? good news!Company must submit Form 2553 Elected by small business companies. Each shareholder of S Corp needs to sign this form before it can be submitted to the appropriate address or faxed to a specific fax number. (All information is listed on the first page of Form 2553.)

Submit S Corp annual tax return

As an S company, you are responsible for submitting annual tax returns. What kind of paperwork does this require? Let’s take a look at the two files your S Corp needs.

Form 1120S

Form 1120S It is the U.S. income tax return of company S. This form contains fairly basic information about S Corp. Return 1120S allows S Corp and IRS to share their financial activities in the previous calendar year.

READ MORE:  The Humans of Fundbox: Malena Stoworth

What if Form 1120S was submitted on March 15 or after the tax deferral deadline? (We will learn more about the IRS extension options later!) S Corp will be punished by the IRS for failing to submit the application on time. A fine must be paid.This Minimum penalty According to data from the U.S. Internal Revenue Service, returns overdue for more than 60 days after 2019 have been increased to the lesser of the tax payable or $435.​​

Schedule K-1 (Form 1065)

Schedule K-1 Summarize the partner’s revenue share, deductions, and credit limit in S company. Every partner or shareholder of S Corporation must complete this form and include it in Form 1120S.

Can I apply for an extension?

S company may need to defer tax payment, depending on its unique business needs.If you know that your S Corp needs to postpone the filing of the annual tax return, please complete and submit Form 7004This is an application to automatically extend the time to submit certain business income tax, information, and other returns. Once your S Corp is approved for the IRS extension, please pay attention to its submission deadline and submit before the deadline.

Do you have more questions about submitting S corporate tax? Although the tips I provided above can help S Corps prepare for the tax filing deadline, I personally cannot provide legal or financial advice. If you have other questions about taxation or the declaration process, it is best to meet with a tax professional. Contact your account or CPA for additional guidance. As a final professional tip, please make an appointment as soon as possible so that your S Corp can complete before the deadline of March 15th.

READ MORE:  Start a medical transportation company

Deborah Sweeney is the CEO MyCorporation.com It provides online legal filing services for entrepreneurs and enterprises, including startup bundles including company and limited liability company formation, registration agency services, DBA, and trademark and copyright filing services.You can find MyCorporation on Twitter at @MyCorporation.

News related