Preparing an efficient federal corporate tax returns

The key to preparing efficient federal corporate tax returns is to utilize a Certified Public Account (CPA) who will develop a tax strategy that will minimize your company’s tax liability in the short and long term while minimizing the impact on cash flow.

A corporation can file their tax return based on either a Calendar year, beginning January 1 and ending December 31, or a Fiscal year, any 12 month period ending on the last day of the 12th month, except for December. Many corporations that use a fiscal calendar year start in October and end in September.

When preparing for your tax returns, the corporation must report income and deductions based on the annual accounting method used for their calendar year. The general accounting methods used is either Cash Basis or Accrual. The cash basis method of accounting reports income in the tax year it was received and deducts business-related expenses in the tax year it was paid. The Accrual method of accounting reports income in the tax year it was received and deducts business-related expenses in the tax year those expenses accrued.

To prepare for your federal corporate tax return, you will need the following documents: A copy of last years federal tax return, the corporation's federal Employer Identification Number (EIN) obtained from the IRS, and the documents filed and accepted by the IRS if the corporation files as an S corporation. You will need supporting documentation for all gross business income received including interest earned in all business savings, checking, and investment accounts, IRC Section 61. You will also need a list of itemized business-related expenses which the company has paid or incurred during the year, IRC Section 162. The itemized expenses would include employees W2 and W3 forms, 1099 forms, and capital assets or property and equipment that was purchased, IRC Sections 197 and 263. Lastly if the corporation has any organizational or start up costs, supporting documentation will be needed.