Another year down, another corporate tax return to compile and file.

The crunch to get your taxes filed by April 15th (or later in the fall if you plan to file for an extension) always tends to get stressful. It’s human nature to procrastinate, and even the most seasoned CPA can let things slip during the process when it’s left too long.

To this end, we’ve put together a tax checklist for C-Corps that our CPAs use when managing corporate income tax returns for our clients.

Cash Basis vs. Accrual Basis Accounting Considerations

Cash-basis accounting is a single-entry method of bookkeeping. Transactions are only recorded when the money enters or leaves your business’ bank account. If your organization uses cash method accounting, you report income in the tax year it was received and expenses the year it was paid.

Accrual accounting is a double-entry method of accounting where the number of debits must equal the number of credits. This approach ensures that the basic accounting equation of net income (assets = liabilities + equity) is always in balance. Under this accounting method, you report income and expenses from the year in which they accrued, even if they have not been paid or received.

What You Need to File Taxes

  1. Last year’s tax returns and filing receipts for the IRS, State, and City
  2. Your Employer Identification Number (EIN)
  3. Your State sales tax certificate
  4. Partnership agreements and articles of incorporation
  5. Records of business insurance
  6. Statements related to company benefits including employer-pension contributions or HSA contributions, profit-sharing, health insurance, etc.
  7. Income statements and balance sheets: Your company’s gross income from all sources including subcontract work you performed for other businesses
  8. Interest statements on savings, investments, checking accounts, etc. earned during the tax year
  9. Itemized business-related expenses from the calendar year, including capital assets purchased
  10. Payroll Documents and Copies of W-2 and W-3 Forms
  11. Copies of Forms 1099 for any subcontractors you employed
  12. Copies of your state sales tax returns

Tax Form:

  1. If your business is considered to be a C-corporation, make sure that you use Form 1120, or Form 1065 if your business is incorporated as a partnership.
  2. If you’re a sole proprietor, you should attach a Schedule C form to your personal income tax return.

Corporate Tax Preparation Checklist

1. Gather business owners’ details

Step number one for filing your state and federal income taxes is to make sure you have the full legal names, addresses, and SIN numbers for the business owner(s):

  • Full legal names

  • Social security numbers

  • Any addresses pertaining to the business

  • The percent ownership for each partner if applicable

  • The business start date or new ownership acquisition date

  • Distribution details for you, your spouse, any of your dependents, and any other business owners

2. Reconcile bank and credit card statements

Compare your bank and credit card statements against your balance sheet to ensure everything lines up. If there are discrepancies, make sure you go back to your balance sheet to make sure everything has been covered. Don’t neglect to include bank fees and any uncleared checks.

3. Review profit and loss statement

Reviewing your P&L statement is important to ensure that all records are accurate and recorded on the correct accounts.

It helps to review monthly P&L side by side to easily notice any major variances. Look at your revenue, sales, and expenses line by line to look for any glaring errors or miscategorization.

4. Check sales records

For those using the accrual method of accounting, it’s important to ensure that all of your sales records are correct, including items such as:

  • The item or service purchased

  • The date of purchase or invoicing

  • The selling price

  • The company who sold the item

  • The customer who bought it

  • Related contact information

5. Calculate returns and allowances

Returns and allowances from year-end earned income statements should be taken into account.

You can report any items returned by the customer and the allowances granted to a customer, declared on item 1b of the IRS Form 1120. The total figure given is deducted from the gross sales.

6. Tally end-of-year payroll

Along with providing Form W-2 to your employees so they can file their taxes, you may need to also provide any of the following forms, depending on the circumstances:

Be sure to also read our Year-End Payroll Checklist for a more comprehensive guide to your payroll requirements for tax.

7. Compile company benefit information

Your business may be eligible for deductibles or tax credits related to the cost of benefits you offer your employees such as:

  • Employer-paid pension

  • Profit-sharing contributions

  • Employer-paid HSA contributions

  • Employer-paid health insurance premiums

  • Cost of other benefits

The rules related to this are nuanced, and you should consult with a tax professional to determine what you can and can’t deduct.

8. Tax deductions

Keeping every receipt related to a business expense, and keeping them properly organized, will help you get the most out of your tax return. It’s all too easy to overlook expenses come tax time, which means you risk paying more tax than you ought to.

The general rule is that you are able to deduct some of any ordinary expenses related to running your business, though there are plenty of exceptions and caveats.

Here’s a list of the many standard deductions your business can be eligible for:

  • Advertising and Promo

  • Bank Fees

  • Merchant Processing Fees

  • Licenses & Permits

  • Commissions

  • Education

  • Equipment Purchases

  • Furniture & Decor

  • Events

  • Gifts

  • Insurance

  • Interest Expenses

  • Leasehold Improvements

  • Professional Fees

  • Office Expenses

  • Rent

  • Repairs & Maintenance

  • Utilities

  • Telephone & Communications

  • Travel

  • Subcontractors

  • Cost of Goods Sold (COGS)

  • Charitable Contributions

9. Assets and depreciation

Itemize the total costs of all assets purchased during the calendar year:

  • The cost of the asset including tax

  • Description of the asset

  • Date put into service

  • Business use percentage (vs. personal use)

You also need to calculate the depreciation of business assets purchased outside of the tax year. Your list of held assets should include:

  • Description of the asset

  • Date put into service

  • The original cost of the asset

  • Accumulated depreciation up to this tax year

  • Business use percentage

  • The recovery period of the asset (3 years, 5 years, 7 years, etc.)

You also need to report any direct sale of assets held by the company during the calendar year:

  • Description of the asset

  • Date of sale

  • The sales price of the asset

  • Any expenses of the sale

  • Accumulated depreciation

Your Partner in Financial Security

Increased regulatory scrutiny over tax disclosures, account balances, and close cycles have put pressure on organizations to ensure their taxes are airtight. Meanwhile, many organizations without a tax advisor in their corner are not taking full advantage of all the various tax deductions that are available to them. Greenough Group is a premier San Francisco accounting and tax advisory firm that makes the preparation process as easy as possible for you and minimize your tax liability with careful planning.

We serve a wide variety of companies, from startups seeking creative solutions to conserve cash, to mid-market businesses incorporating new processes due to domestic or international expansion. Greenough will be by your side providing you with over 20 years and 800 companies’ worth of experience.

If you’d like to receive a free consultation on how our accounting specialists can assist your growing business overhaul your financial processes and reporting to set yourself up for success, drop us a line.