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Incorporation
As a separate legal entity, a corporation must submit a tax return each year with the IRS. For corporations with a fiscal year ending December 31, tax returns are due on March 15. A corporation must file a tax return even if it does not have income or no tax is due. C corporations file tax returns on Form 1120 or 1120A.
Although S corporations do not pay federal taxes at the corporate level, they still must prepare a separate tax return (Form 1120S).
For 2007, the federal income tax rate for a C corporation is as follows:
Income |
Tax Rate |
Up to $50,000 |
15% |
From $50,000 to $75,000 |
25% |
From $75,000 to $100,000 |
34% |
From $100,000 to $335,000 |
39% |
From $335,000 to $10,000,000 |
34% |
From $10,000,000 to $15,000,000 |
35% |
From $15,000,000 to $18,333,333 |
38% |
Over $18,333,333 |
35% |
Some states, including California, also have a state corporate income tax. Corporations that anticipate a tax liability of $500 or more must estimate their taxes and make quarterly estimated tax payments. Corporations with employees are required to pay federal (and sometimes state) payroll and unemployment taxes.
To learn more and speak with a representative, please call us at (888) 381-8758. We are happy to answer any questions you may have.
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