Do You Have to File 1120 if No Activity?

Small business owners frequently question whether they must submit a tax return if there was no activity in their company throughout the year. The answer is that even if your company generated no revenue or outlays for the year, you must still submit a form 1120, U.S. Corporation Income Tax Return. The IRS may impose fines and interest costs if a tax return is not filed.

You can submit Form 1120 by using the “Final Return” checkbox at the beginning of the form if your company has no revenue or outgoing costs. In addition, you must select “No” when asked whether the corporation earned any money or incurred any costs during the tax year. By doing this, you are alerting the IRS that this is your company’s last tax return and that there is no need for it to submit another one in the future.

By submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, you can ask for a delay if your company is unable to submit its tax return by the deadline. You can submit Form 7004 to the IRS service center where you typically file your tax return electronically or by mail.

Which pays more taxes, an LLC or an S-Corp? An LLC or S-Corp’s tax obligation is influenced by a number of variables, such as the type of revenue received, the state where the firm is located, and the quantity of income earned. Due to the income being passed through to shareholders and being taxed at their individual tax rates, an S-Corp often pays less taxes than an LLC. An LLC, on the other hand, must pay self-employment taxes on all of its earnings, which might be more expensive than the tax rate for S-Corps. When Should You File as an S-Corp, Also?

Your company must be organized as a corporation in order to file as an S-Corp. Following that, you must submit Form 2553, Election by a Small Business Corporation, to the IRS. The decision must be made within two months and fifteen days of the start of the tax year in which an S-Corp is intended to be taxed. For instance, if your company’s tax year starts on January 1, you must make the choice by March 15 of that year.

The S-Corp tax filing date is March 15th. The due date is postponed to the following business day if, however, the 15th falls on a weekend or holiday. The deadline is pushed back to September 15th if you submit an extension using Form 7004. Remember that a filing extension does not equal a payment extension. To avoid fines and interest fees, you must pay any taxes you owe by the initial deadline.

In conclusion, even if there was no activity throughout the year, submitting a tax return for your firm is crucial. You can avoid IRS fines and interest costs by submitting Form 1120 and other necessary paperwork on time. It’s also crucial to file your taxes correctly and comprehend the tax ramifications of various business structures, such as LLCs and S-Corps.