Individual Tax Preparation for Houston Businesses
C corporations enjoy several advantages that can fuel the company’s growth, but those advantages come with additional tax obligations. C corp tax preparation services are designed to help business owners meet those tax obligations – on time and with unfailing accuracy.
For example, your tax preparation expert will ensure the following are considered when preparing your company’s taxes:
- Double taxation. C corps are subject to double taxation, which means the corporation is taxed at the entity level and then shareholders are taxed again on their income.
- Deductions and credits. For C corps, the goal during tax preparation is to minimize the impact of double taxation on shareholders. Maximizing all available tax deductions and credits is one way to do this.
- Other tax saving techniques. Tax preparation experts can help C corps execute the tax planning strategies they have in place to reduce double taxation impacts further.
A C corp tax preparation expert can help your company make sense of the complex tax laws governing corporations and ensure they’re utilized for your organization’s benefit.
How Tax Preparation Professionals Can Help with C Corporation Tax Prep
When it’s time to prepare and file, your tax preparation expert can assist with the following:
- Filing Form 1120 – Form 1120 is the primary tax filing document for corporations and is used to report the company’s income, including its gross receipts, capital gains, interest, dividends, rent and other income sources. The cost of goods sold is also recorded in the income section.
Deductions are also reported on Form 1120, and this is where tax preparation professionals can help offset the impact of double taxation. Some of the most common C-corp deductions include deductions for wages, salaries and officer compensation, maintenance and repairs, marketing, rent, taxes, licensing, interest, bad debt, depreciation and employee benefit programs. When deducting employee compensation, it’s important to report “reasonable” levels of compensation for your shareholders, as the IRS is more likely to audit a C corp that reports unusually high wages relative to shareholder dividends (which cannot be deducted).
With income and deductions defined, your tax preparation professional will calculate the company’s taxes, using the federal and – if applicable – state corporate tax rate. For the majority of C corps, this is a flat 21 percent rate. Some states, including Texas, also levy a sales tax, and this must be calculated with the corporate rate.
In addition to income, deductions and tax calculations, your Form 1120 must also include the relevant schedules. Schedule L (balance sheets) and Schedule M-1 (income reconciliation) are the most common attachments to Form 1120, and your tax preparation expert can develop them, as well. - Advise on future tax planning strategies – During and following your tax preparation services, your tax prep professional can also provide guidance on corporation tax planning strategies. Some of these strategies can be applied right away, while others require long-term planning to execute.
Your tax preparation professional can identify the right tax-saving strategies for your corporation, and there are plenty to choose from. For example, C corps can defer income or accelerate expenses to reduce net income for the current tax year. Timing expenses in this way will also allow corporations to maximize depreciation deductions.
A tax expert can also recommend an optimal approach to balancing wages and dividends, so your company can reduce its tax burden through deductions without attracting undue notice from the IRS.
Certain tax credits may also be relevant to your company and can reduce its tax burden further. Examples include credits for research and development, and credits for environment or energy efficiency initiatives.
If your company does business internationally, your tax preparation expert can review any potential tax treaties and leverage them to possibly reduce tax liabilities. - Provide expert representation to the IRS – Ideally, your company will never be targeted by the IRS for an audit or other communications, but it does happen, and it can happen to your C corp as well. If your company is targeted by the agency due to a tax-related issue, your tax preparation expert may be able to provide expert representation to the IRS. This includes responding to IRS communications, providing information to the agency on request and explaining the company’s tax positions.
Only certain tax prep experts (enrolled agents, for example) are able to provide this service, so choose your tax professional carefully.
In short, a C corp tax preparation service will guarantee your current tax liabilities are properly calculated and reported, while ensuring your company’s future tax strategies are aligned with your company’s goals.
A Tax Preparation Expert Can Also Provide Tax Planning Services
Tax preparation and tax planning are often mistaken for each other, but they are separate services that play different roles for an individual taxpayer. Whereas tax preparation services are focused on the present tax year, tax planning takes a long-range view of a client’s tax situation. Here is why taxpayers frequently combine the two tax services:
- To minimize future tax obligations – Tax preparation ensures a taxpayer meets their current tax obligations. Tax planning helps individuals control their future tax obligations through smart use of deductions, retirement accounts, investment tools and other strategies.
- To support long-term financial goals – Tax preparation services protect a taxpayer’s financial future by preventing costly penalties or other unwelcome tax surprises. Tax planning services protect a taxpayer’s financial future by ensuring they don’t pay more than they need to. By taking a long-range view (multiple years into the future), a tax planning expert will help the taxpayer know what to expect when planning for the future.
- To provide total peace of mind – Tax preparation services give taxpayers present peace of mind knowing that their taxes will be properly prepared and filed on time. Tax planning services provide ongoing peace of mind by outlining an individual’s tax strategy and providing a clear course of action.
A Knowledgeable C Corp Tax Preparation Service Will Ensure Proper Reporting and Filing
C corporation entities enjoy many benefits due to their structure – they have better access to capital, for example – but they’re also held to stringent tax laws. Adhering to these tax laws is a matter of utmost importance for C corps, as penalties and interest may accrue on any unpaid taxes.
To ensure this doesn’t happen to your corporation, consider partnering with a C corp tax preparation expert. C corp tax prep services can guarantee filing accuracy and timeliness, and some are qualified to provide expert representation to the IRS, as well. If your tax prep professional has worked with C corps in the past, they can provide insight into tax planning and reduce the impact of double taxation. Together, this adds up to present and future value for the organization, with more efficient tax management strategies in place.
