Federal Tax Return: The Dread Of Filing My 1120
If you did not know by now, your United States C corporation 1120 federal tax return is due in April this year (2017) rather than March, assuming your business runs January through December. Note that I am not a CPA so I am not an expert on all things taxes, I just know that Illinois and the Federal Government made this deadline change in 2017. This does not mean that I am ready to file or pay, though I always have good intentions.
My main complaint with filing my 1120 is that it is busy work. While it might be my only federal tax return that I file for the corporation, it is certainly not the only filing I make during the year, or the only paperwork that needs to be done. I know, I know, the tax man needs his money, but it comes at the expense not only of cash, but of my time to do more financially productive things. Here is an idea of all the busy work you must do with a corporation:
Number one on my list of busy activities for the year is just keeping up with my accounting. I generally enter income and expenses as the year goes on, but must review classifications, categories, proof, and more. I try to do it on a monthly basis when I have time, but I often find myself multiple months behind.
For the state, I have been filing an ST-1, which is for sales tax on our retail sales of goods, a corporate report, an 1120-IL, and various payroll filings. I have few complaints about payroll because my payroll package takes care of most of it. The ST-1 takes a while to compile data, though I am hoping it will be almost nothing in future years.
Federal Tax Return
For the federal government, the 1120 is the form. The 1120 and 1120-IL depends on my accounting to be right. I am often checking my accounting and making adjustments for a while before I actually fill out either form. The 1120 is not difficult really, it is just all that leads up to it and being able to pay it on time that stresses me out.
Filing an Extension
Really cannot get your 1120 done on time? The federal government requires you file a 6 month extension by filling out a form and sending it in. In theory, you need to estimate your tax liability and pay it. That can be difficult to do before the 1120 is done.
Other Busy Work
We hold stockholders and board of directors meetings once a year, and everything must be documented. In addition, if you make major decisions during the year, the board must sign off on it or it may be a problem. If you are your own stockholder, and your only director, this documentation is cumbersome but must be done to satisfy your requirements as a corporation.
I suppose this article wound up being one long complaint. There are pluses and minuses with all the busy work. The main minus is the time away from productive work that earns you a profit. However, one plus is that it keeps you focused and organized.
How do you prepare for filling out your 1120 federal tax return and deal with all your corporate busy work?