You must submit specific tax documents to the Internal Revenue Service (IRS) each year if your business is an S-Corporation. To maintain your company in compliance with tax rules, file these paperwork on time to prevent fines or other problems. The tax documents you must submit as an S-Corp are listed below:
The basic tax form for S-Corporations is Form 1120S. This form must be submitted annually in order to report your business’s earnings, credits, and deductions. On March 15th, which is the 15th day of the third month following the end of your fiscal year, Form 1120S is due. If you require extra time to complete your tax return, you can file an extension using Form 7004.
Schedule K-1: This document, which is an attachment to Form 1120S, details the portion of the S-Corporation’s income, losses, deductions, and credits that belongs to each individual shareholder. Even if a shareholder does not receive any distributions from the S-Corp, you must nevertheless send them a Schedule K-1 each year. Additionally, March 15th is when Schedule K-1 must be released.
You must submit Form 2553 to the IRS in order to choose S-Corporation status for your company. Within two months and fifteen days of the beginning of the tax year for which you want the S-Corporation status to apply, you must submit Form 2553. For instance, you must submit Form 2553 by March 15th if you want the S-Corporation status to become effective on January 1st.
A corporation elects S-Corporation status by submitting IRS Form 2553, S Election. The corporation is regarded as a pass-through organization for tax purposes by choosing S-Corporation status. This indicates that the income, credits, and deductions of the corporation are carried over to the shareholders’ individual tax returns. Having an S-Corporation status can help shareholders save a lot of money on taxes by preventing double taxation on corporate income.
The IRS may take up to 60 days to approve Form 2553, S Election. However, if you submit your application electronically and there are no mistakes or omissions, the approval procedure might go more quickly. The IRS may require additional information or ask questions about your application, which could delay the approval process.
Finally, if you are the owner of an S-Corporation, you must annually file Form 1120S and distribute Schedule K-1 to each shareholder. In order to choose S-Corporation status for your company, you must also submit Form 2553. These tax forms are necessary to maintain your company in compliance with tax regulations, avoid fines, and stay out of trouble with the law. You should speak with a licensed tax expert if you have any concerns about the tax paperwork you must file for your S-Corporation.