A corporation is a business entity that consists of an organization owned by shareholders. This means that the owners of the company have complete control over the company’s financial and legal matters, as well as its policies. The shareholders have no liability or responsibility for the company’s debts, liabilities, and other issues. A corporation must file its own taxes independently from the individual members’ taxes; it also has specific tax laws and regulations which apply to its unique circumstances. Every state has different corporation tax laws – some may not even charge taxes at all!
To find out about corporate tax laws and how they might affect your business, Corporations are generally subject to two types of income taxes:
2) Share holder dividend distributions.
A corporation’s income earned in North Carolina is subject to a 6% state rate unless the amount earned falls under $5,000 per year, in which case there is no taxation. If you’re doing business outside of North Carolina but earning more than $5,000 annually then you will be liable for this flat 6% tax rate.
As a small business owner, you’re often faced with the tough decision of how to file your taxes. This can make things even more complicated when you are operating as a corporation and have some specific tax return needs. Here is what you need to know about filing your North Carolina corporation tax return.
1) The state requires that a calendar year corporation in North America file its return by the last day of March or the first day of April, whichever is closer.
2) A corporation must file an annual report for any anniversary of its incorporation up until the 30th day of November. The cost for filing this report is $5 per year.
3) There are many different types of corporations; however, the most common type of corporation that files taxes in NC would be an S-corporation. These corporations only pay one level of taxation (at the individual income tax rate).
4) Corporations that do not meet these criteria may be eligible to take advantage of another set of regulations called Subchapter S-Corporations, which will result in double taxation on both corporate profits and shareholder earnings each year.
5) Even if you are operating as a C-corporation, which generally has different reporting requirements than other types of corporations, there may still be instances where you would need to complete certain paperwork related to paying employee wages. If you have employees who were paid more than $600 during the previous calendar year, then you are required to file Form W-2 and Form W-3.
6) It is important to note that all corporate officers should also register themselves with the IRS at least once every five years.
7) In order to register, these individuals should fill out Form SS-4 and include information such as their name, address, Social Security number, employer identification number (EIN), etc.
8) If they are submitting a renewal application instead of registering for the first time they should include information from the original registration form along with details about why they aren’t submitting anything new.
9) Corporations must also submit a 1099 statement for any service providers that provide $600 or more worth of services in a given year.
10) For those interested in taking advantage of deductions and credits associated with owning a corporation, it is important to note that your company may still qualify for the Foreign Earned Income Exclusion even if it operates domestically.
11) However, before making any decisions about whether or not to take these steps you should consult with an accountant since the Foreign Earned Income Exclusion comes with eligibility requirements like living abroad and having foreign earned income.
12) Finally, it is very important to remember that if you don’t plan on being profitable throughout the next year there may be tax benefits associated with suspending operations through either declaring bankruptcy or dissolving the company entirely.
Check to see if you owe a franchise tax. Under North Carolina law, corporations are liable for a franchise tax on the amount of capitalization from 50% up to $750,000 per year. If you have a corporate net worth of more than $750,000 at the end of the corporation’s taxable year then you need to file for corporation income tax return for your net worth over $750,000 as well as fill out additional paperwork that is specific only in regards to your net worth over $750,000. In order to determine whether or not you need to file for a corporate income tax return, you can use this calculator and add in your net worth. If your net worth is less than $750,000 then you do not need to complete any other forms besides what was completed on the first page.
The first step in the filing process is ensuring that you have filed your Articles of Incorporation and it has been approved by the Secretary of State. After this, a Resident Agent must be appointed. Next, you must determine if your corporation has assets or employees in other states. This can change which state tax return is required; for example, corporations with assets or employees in both North Carolina and South Carolina need to file a South Carolina return as well as a North Carolina return. Some corporations also may need to file an Ohio corporation tax return, but not all do. Corporations without any income derived from Ohio should not file an Ohio return.
Corporations in North Carolina are required to keep certain records for at least three years, depending on the kind of record, as follows:
If you fail to file and pay the tax that is due by the filing deadline, the following penalties will apply: A 1% penalty on unpaid taxes per month or a fraction thereof up to 25%. The maximum penalty is 75%. If there is still a balance due after running these penalties, additional penalties can be applied. Interest is charged on any unpaid federal taxes as of January 1 following the filing date of this return. This interest rate is not negotiable. In addition, if a company fails to remit payment for withheld income tax from wages or other income paid during the calendar year, an underpayment penalty may also be imposed. Penalties are determined by what happened in the previous three years and how much was owed each year in addition to what is owed now. If a company fails to make estimated payments for self-employment taxes during a calendar year, an underpayment penalty may also be imposed for all payments made for employment taxes for that same year.
There are three penalties for late payment of estimated taxes for Partnerships and S Corporations, based on when the tax is paid. If you pay the taxes more than 60 days after the end of the tax year, there is a five percent penalty for every month or part of a month between the due date and when it was paid. The second type of penalty for late payment of estimated taxes is a ten percent penalty per month or part of a month, starting with the second full calendar month following the due date until they are paid in full. The third type of penalty is twenty-five percent per month starting with each full calendar month following the due date up until they are paid in full.