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Running a small business can be a personally and financially rewarding experience, but it can also be challenging. Entrepreneurs need to work long hours, manage employees, interact with clients or customers, and stay on top of their finances. On top of that, business owners have tax obligations and paperwork that are more complex and time-consuming than an individual tax return. In addition to federal, state, and local taxes, there are income, sales, and employment taxes. Plus, the business’s legal structure will determine the type of federal income tax form(s) it will need to file.
There are many different income tax forms. This Balboa Capital blog post discusses Internal Revenue Service (IRS) Form 1120, the United States Corporation Income Tax Return. Unless exempt under section 501 of the Internal Revenue Code, corporations use this form to report their income, deductions, and credits to the IRS¹. We think you will find this guide to IRS Form 1120 helpful if your business entity is a corporation.
What is IRS Form 1120?
If your business is a domestic corporation, you must file a tax return regardless of whether or not you have taxable income. As mentioned earlier, IRS Form 1120 is the United States Corporation Income Tax Return that corporations use to report income, losses, gains, deductions, and credits. You will need to file tax Form 1120 if you have chosen to have your company taxed as a corporation or are set up as a limited liability company (LLC). Other business entities that need to file this form include corporations in the farming industry and corporations with an ownership interest in a financial asset securitization investment trust (FASIT), among others¹.
It is important to note that some types of business organizations file special returns instead of Form 1120. For example, S corporations file the 1120-S form, cooperative associations file the 1120-C, and real estate investment trusts file the 1120-REIT form. You can find the complete list of return types on the IRS website¹.
What is needed to file IRS Form 1120?
Filing IRS Form 1120 is an essential part of the tax filing process for corporations. Therefore, it is important to understand what you need to file the form correctly and accurately. Before you start, it is a good idea to look at the latest version of the form on the IRS website to see detailed instructions on completing and assembling your return and the latest developments relating to the form.
The form is lengthy and comprises multiple pages and sections that ask about income, deductions, and other relevant items. You must complete each entry on the form that applies to your business. Some of the information needed to complete the form include your employer identification number (EIN), total assets and income, cost of goods sold (COGS), tax deductions, and business tax credits. Upon completing Form 1120, you will see how much your corporation will need to pay in quarterly taxes.
How to file your company’s return.
Form 1120 must be filed before the deadline to avoid late penalties. A corporation needs to file its return by the fifteenth day of the fourth month after its tax year ends. Startup corporations with short-period tax returns need to file by the fifteenth day of the fourth month following the end of the short period. The deadline is different for corporations with fiscal tax years that end on June 30. In that case, the filing deadline is the fifteenth day of the third month following the end of the tax year. It is also worth noting that a corporation can file its return on the next business day if a due date falls on a weekend or a legal holiday.¹
If your corporation has total assets of $10 million or more, or you file 250 or more returns annually, you must file your Form 1120 electronically (e-file)¹. Otherwise, you can file your form electronically or via mail via a private delivery service designated by the IRS².
How to ensure an accurate tax return.
Because IRS Form 1120 is involved and requires schedules and other forms when finalizing the form, you want everything to be completed properly and without missing any information. If you don’t feel comfortable completing your return, hire a certified accountant. A good accountant can assist you at each step to ensure that your form is complete, accurate, and well-organized. In addition, an accountant can help you save time and money and might reduce your tax liability.
Balboa Capital, a Division of Ameris Bank, is not affiliated with nor endorses the Internal Revenue Service (IRS). The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.