A Guide to Corporate Tax Services
Strategies for Reducing Taxes
Structuring a Company
Mergers & Acquisitions
Restructuring a Corporation
CEO Compensation Packages
Purchases & Sales
Liquidations & Dissolutions
A corporation that is based in the United States must pay federal taxes that are equal to 34 percent of the annual income that it earns if the business generates profits that exceed $335,000.
A business that produces less than $335,000 in yearly profits is only required to pay taxes that are equal to between 15 percent and 25 percent of the first $75,000 that the company earns; however, all of the profits that the corporate entity generates between $75,000 and $335,000 are subject to a tax rate of 34 percent.
Each company that earns profits of $15 million to $18.3 million must give an additional three percent of its income to the government in the form of taxes.
In addition to submitting a company’s tax forms at the end of each year, the accountants at a business that provides tax services for corporations will carefully track the enterprise’s expenses, revenue and profits, and as a result, the professionals will be fully prepared to handle an audit by providing the IRS with monthly records and quarterly reports.
Strategies For Reducing A Corporation’s Taxes
The highly experienced accountants can place a corporation’s profits in numerous types of tax-deferred accounts and help the company to invest in energy-efficient and environmentally friendly equipment in order to receive tax deductions and credits from the Internal Revenue Service.
Additionally, the government has recently begun to provide substantial tax breaks for certain types of businesses, such as companies that offer health care services and enterprises that have donated at least 12 percent of their yearly earnings to non-profit organizations.
Structuring Your Company
The IRS allows you to choose among five types of businesses. A business owner’s options include an S corporation, a sole proprietorship, a partnership, a traditional corporation or a limited liability company.
Each business must use different tax forms. A sole proprietor will have to pay income taxes that are very similar to those that an individual citizen is required to provide; however, limited liability companies and S corporations must pay excise taxes and estimated taxes.
Mergers And Acquisitions
Accountants can provide a written assessment of the effects of a merger with another business or the acquisition of another company.
A large corporation that gives a business owner a certain number of shares of its stock in exchange for the proprietor’s small company will have to pay much lower taxes than an enterprise that uses cash or obtains financing in order to purchase the smaller business.
Restructuring A Company
A professional who provides corporate tax services can provide a list of the loans, grants and tax deductions for which every type of business is eligible.
If an entrepreneur wants to substantially modify the company, an accountant will submit a detailed report and a comprehensive plan to the IRS as early as one year before the process is due to be completed.
Designing A CEO’s Compensation Package
Instead of receiving all of his income in the form of a check, a CEO can accept stock options that are completely tax-deductible.
Additionally, the leaders of corporations can give themselves bonuses that account for as much as 95 percent of their total earnings.
Analyzing A Corporation’s Purchases And Sales
Frequently, the IRS will give a corporation deductions that are equal to the total cost of all of the equipment that the company purchases, the inventory that the business acquires and the daily costs of operation.
If a corporation sells some of its assets, an accountant will subtract the current value of the assets from the sum of their original prices, and the company may be able to report the amount of the difference as a loss in order to lower the corporation’s taxable income.
Liquidations And Dissolutions
When closing a business, the entrepreneur must fill out form 1096 in order to provide detailed information about the closure of the company and the liquidation of its assets.
A proprietor will also have to submit form 4797, which requires information about the sale of any corporate property.
Capital Investment Planning
The tax rate for most investments is 15 percent; however, individuals who earn more than $400,000 each year will have to pay taxes that are equal to 20 percent of their income from investments.
Furthermore, citizens who generate earnings of more than $200,000 every year must pay a surtax of 3.8 percent.
The tax requirements that the IRS has implemented for domestic offices also apply to profits that are earned by foreign branches of a corporation that is based in the United States.
Furthermore, companies that are headquartered in other nations but have a permanent office in the U.S. that produces income must abide by the tax laws of the United States.
Reviewed by: Brian Winter, CPA