All corporations, from the one-man operation out of your neighbor’s living room to a multinational corporation with thousands of employees, file their income tax returns with IRS Form 1120. It’s the 1040 of the business world: it’s ubiquitous and if you own a corporation you ought to know all about it, or have an accountant that does. There are penalties for not filing on time, penalties for not submitting your Federal Deposits on time, which in part are based on completing your Form 1120…the list goes on as to why this form is ultra important to keep in the forefront towards the end of the tax year.
What You Need to Know About IRS Form 1120
The corporate tax return is due March 15, a full month ahead of individual income tax returns. Your corporation must file the 1120 even if it is in bankruptcy. Even if your corporation isn’t making any money…still file IRS Form 1120. The only domestic corporations not required to file this form are those that have IRS-sanctioned tax-exempt status. That would be a 501 classification as a non-profit organization. If you had 501 status you’d know it because you’d remember applying for it! It’s a pretty hefty set of paperwork and a multi-step process to achieve tax-exempt status with the IRS so you would definitely know it if your corporation was 501.
Some LLCs Must File IRS Form 1120
The LLC is a strange business entity: the IRS doesn’t recognize this business structure, so any business set up as an LLC must choose how they want to be taxed. “Not at all…!” is not a choice, sad to say. The choices include being taxed as a corporation. Therefore, some LLCs must file the IRS Form 1120 each year, as if they were corporations.
How to File IRS Form 1120
The best way to file your corporate tax return is to have a professional do it. At least the first time, that is. Learn the ins and outs of this complex form and how your business works. Then, after a year or 2, try it yourself using prior years’ professional-filed returns as a guide. Your best bet is to shell out about $100 for TurboTax, business edition. This is a software-version of the IRS Form 1120 and makes filing a breeze. Turbotax isn’t the only company that makes business tax software but they are the most well-known.
You’ll be guided through question-and-answer screens about your business until you’ve made it all the way through and you’re ready to file the 1120. It really takes the sting out of doing taxes and you can get help on things you don’t understand, either from your former accountant, the online TurboTax forums, or by using search engines online.
For a complete look at the actual IRS Form 1120, go here to the IRS website.