Running a business can get hectic, but it is important that corporations keep up with filing deadlines and paying their taxes. Corporations must make periodic estimated tax payments to the IRS in order to comply with tax rules. Also, due to their ability to select a fiscal year, corporations may have different filing deadlines than other firms who are on a calendar year.
Estimated Tax Payments
Corporations must account for, and make quarterly payments, if their corporate tax for the year is expected to be $500 or more. These installment payment deadlines are due on the 15th day of the 4th, 6th, 9th, and 12th months of a corporation’s tax year. For more info on calendar vs fiscal year and the option to change it, check out our article.
EFTPS
Thankfully, the IRS has made things convenient in meeting estimated tax payment requirements by making the Electronic Federal Tax Payment System (EFTPS) available to corporations paying their estimated tax payments. Check out our previous article for more info on how to sign up for it.
Submitting the paperwork
Most corporations use Form 1120 to file their taxes with the IRS. Form 1120 can also be e-filed, and certain corporations with assets of at least $10M and file 250 returns (as in, returns for employees) must use E-File.
Penalties
Failing to make timely tax payments can incur penalties in addition to what a corporation will owe. For example, late filings get penalized 5% of the unpaid tax for each month the return is late up to a maximum of 25% of the unpaid tax. A late payment of tax may be penalized half of 1% of the unpaid tax for each month the tax is not paid also to a maximum of 25% of the unpaid tax. However, if a corporation can substantially prove a reasonable cause for not making timely payments, the penalties may be waived.
Keeping up with corporate taxes is important for a business, but having a team manage the finer details of the accounting going into the corporate taxes can free up a business to focus on growth. MiklosCPA has helped many small to mid-sized businesses with their tax and accounting needs using our “virtual office” services. Feel free to reach out to us to learn more of our services. Also follow us on our social media pages for more future “good to know” articles.