Tax Strategies to Ensure You Only Pay What You Owe
When you want a CPA who is actively involved in not only tax preparation, but also tax planning, call Ortega Accountancy. We are responsive and proactive, addressing our client’s needs in a timely fashion while also thinking ahead to tax strategies that might be advantageous for your business and personal taxes.
We help privately held businesses of all sizes—from startups to larger enterprises—by providing income tax return and income tax accounting services that reduce the risk of financial statement and tax compliance issues.
Types of Businesses We Support
At Ortega Accountancy, we are focused primarily on business tax preparation. We know how busy business owners are and so we stay on top of all the new IRS regulations and state and local tax changes so you don’t have to.
Types of business entities we work with include:
- Sole-proprietorship taxes
- LLC taxes
- S-corporation taxes
- C-corporation taxes
- Tax exempt entities (nonprofit)
S-Corporation Tax Preparation
Reduce Your Taxable Burden
Tax-Filing For Pass-Through Entities
S-Corporations have specific tax filing requirements that must be met to ensure compliance with federal tax laws. Here are some of the key tax filing requirements for S-Corps:
- Form 1120S: S-Corporations must file Form 1120S, which is the U.S. Income Tax Return for an S Corporation. This form is used to report the corporation’s income, deductions, and credits to the IRS.
- Schedule K-1: S-Corporations must also provide each shareholder with a Schedule K-1, which shows the shareholder’s share of the corporation’s income, deductions, and credits. Shareholders use this information to report their share of the corporation’s income on their personal tax returns.
- State Tax Returns: S-Corporations may also be required to file state tax returns in the states where they do business. State tax laws vary, so it’s important to check the requirements for each state where the corporation operates.
Meeting these tax filing requirements is crucial for S-Corporations to maintain compliance with federal and state tax laws. As a result, many S-Corporations turn to CPA firms like ours to ensure that their tax filings are accurate and timely, which can help them avoid penalties and other potential tax-related issues.
Corporate Entity Tax Filing Services
C-Corporations have specific tax filing requirements that must be met to ensure compliance with federal tax laws. Here are some of the key tax filing requirements for C-Corporations:
- Form 1120: C-Corporations must file Form 1120, which is the U.S. Corporation Income Tax Return. This form is used to report the corporation’s income, deductions, and credits to the IRS.
- Schedule K-1: C-Corporations do not issue Schedule K-1 to their shareholders because the corporation pays its own income tax, and the shareholders are not responsible for the tax on the corporation’s income.
- State Tax Returns: C-Corporations may also be required to file state tax returns in the states where they do business. State tax laws vary, so it’s important to check the requirements for each state where the corporation operates.
- Estimated Taxes: C-Corporations are generally required to make estimated tax payments throughout the year to avoid underpayment penalties. Estimated taxes are paid on a quarterly basis and are based on the corporation’s projected income for the year.
Meeting these tax filing requirements is crucial for C-Corporations to maintain compliance with federal and state tax laws. As a result, many C-Corporations turn to CPA firms like ours to ensure that their tax filings are accurate and timely, which can help them avoid penalties and other potential tax-related issues.
C-Corporation Tax Preparation
State and Federal Corporate Tax Prep and Filing
What is the Difference between an S-Corporation and a C-Corporation
If your business entity structure is in question, if your accountant or CFO has recommended changing from LLC to S-Corp or S-Corp to C-Corp you may be wondering what the difference is.
Taxation
S-Corporations do not pay income tax. Taxes are passed through to the shareholders’ personal tax returns.
C-Corporations pay income tax on their profits. Profits are taxed at the corporate level and then again when distributed to shareholders as dividends.
Shareholders
S-Corporations are limited to 100 shareholders who are either individuals or certain types of trusts and estates.
C-Corporations can have an unlimited number of shareholders who can be individuals, other corporations, or other types of entities.
Management & Ownership
S-Corporations are typically managed by the shareholders and are not allowed to have nonresident alien shareholders.
C-Corporations are managed by a board of directors who are elected by the shareholders who can be nonresident aliens.
Formalities
S-Corporations have fewer formalities in that they are not required to hold annual shareholder meetings or keep minutes of those meetings.
C-Corporations must hold annual shareholder meetings and record minutes of those meetings.
Sole Proprietor Tax Preparation
Be sure you take the deductions you are due.
Business Taxes on Personal Tax Returns
Sole proprietors are not corporations, so they are not subject to corporate tax filing requirements. Instead, sole proprietors report their business income and expenses on their personal tax returns using Schedule C (Form 1040), which is filed along with their personal income tax return.
Here are some important things that sole proprietors should keep in mind when filing their taxes:
- Self-employment taxes: Sole proprietors are subject to self-employment taxes, which cover Social Security and Medicare taxes for self-employed individuals. These taxes are in addition to income taxes and are calculated on Schedule SE (Form 1040).
- Estimated taxes: Sole proprietors are required to make estimated tax payments throughout the year if they expect to owe more than $1,000 in taxes. Estimated taxes are paid on a quarterly basis and are based on the sole proprietor’s projected income and self-employment taxes for the year.
- Deductions: Sole proprietors can deduct expenses related to their business, such as office supplies, equipment, and business travel. It is important to keep accurate records of these expenses to support the deductions taken on the tax return.
- State taxes: Sole proprietors may also be required to file state tax returns and pay state taxes in the states where they do business. State tax laws vary, so it’s important to check the requirements for each state where the business operates.
- Retirement savings: Sole proprietors can save for retirement using a variety of options, such as a Simplified Employee Pension (SEP) plan, a solo 401(k), or a SIMPLE IRA. These plans allow the sole proprietor to make tax-deductible contributions to a retirement account.
Navigating the tax filing requirements as a sole proprietor can be complex, so it is often helpful to work with a qualified CPA or tax professional who can provide guidance and help ensure that the tax return is accurate and timely filed.
Flexible Tax Filing Structure
Limited Liability Companies (LLCs) are a popular business entity choice due to their flexibility in management, limited liability protection, and pass-through taxation. Here are some important things that LLCs need to know about business tax filing:
- Tax classification: LLCs have the flexibility to choose their tax classification for federal income tax purposes. By default, LLCs with one member are treated as sole proprietorships and LLCs with multiple members are treated as partnerships. However, LLCs can elect to be taxed as C-Corporations or S-Corporations.
- Pass-through taxation: Like sole proprietorships and partnerships, LLCs with pass-through taxation do not pay federal income tax. Instead, the profits and losses of the business are passed through to the owners’ personal tax returns and taxed at their individual income tax rates.
- Self-employment taxes: LLC owners who work in the business are subject to self-employment taxes, which cover Social Security and Medicare taxes for self-employed individuals. This tax is in addition to income tax and is calculated on Schedule SE (Form 1040).
- Estimated taxes: LLC owners who expect to owe more than $1,000 in taxes are required to make estimated tax payments throughout the year. This applies to both federal and state taxes.
- State taxes: LLCs may be subject to state income tax, depending on the state in which they are located and the type of income they generate. LLCs may also be subject to state sales tax if they sell taxable products or services.
- Deductions: LLCs can deduct expenses related to their business, such as office supplies, equipment, and travel expenses. It’s important to keep accurate records of these expenses to support the deductions taken on the tax return.
LLC Tax Preparation
Choose your filing status (wisely).