C Corp Filing Requirements: Everything You Need to Know

There are many requirements in filing a federal income tax return for your small business, depending on your business structure. Each type of entity requires a different tax form and filing requirements to report your business income and expenses. This article will bring you an overview of C corporations and C corp filing requirements.

What is a C corporation?

C corporation is a form of business organization in which the owner (or shareholders) are taxed separately from the business. Shareholders are the corporation’s owners, each owning a fraction of the company. A shareholder may own a share of the stock of the corporation. C corporations raise funds by selling these shares.

The C corp entity is taxed on income earned, whereas shareholders are taxed on individual income. A C corporation pays the same tax on its revenue as a person would on their annual salary—a flat 21% on operating earnings. 

Because shareholders in a C corporation are wholly separate from the corporation, income delivered to stockholders of profits or other payments is paid at the shareholders’ rates, leading to “double taxation.”

How are C corps taxed? 

C corps must first pay corporate taxes. Investors then pay taxes on profits received by the corporation. This tax rule is also known as double taxation, meaning that income taxes are paid twice on the same income source. Double taxation occurs when income is taxed at both the corporate and personal levels.

Though the possibility of double taxation is frightening, there are many ways that business owners can lower the taxes. For example, C corps can deduct its operating costs from its revenues, lowering its taxable income. So, if a corporation earns $100,000 in revenue but spends $65,000 on operating expenses in a financial year, the company’s tax liability is only $35,000, not $100,000.

Furthermore, C corp owners only pay their taxes if the corporation pays them profits. So if a C corporation decides not to sell stock and retains profits instead, it can also avoid double taxation.

All C corps must file and submit Form 1120. This report provides the IRS with information on the corporation’s revenue, gains, liabilities, deductions, and income tax payable.

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C corp filing requirements that you need to know

If you decide to run your business as a C corporation, here are the critical C corp filing requirements that you must know: 

  • Choose a business name. Your C corp must be a legal company with a legal reputation established with the authorities. Once you have filed your business as a C corp, you mustn’t operate under another registered name. 
  • File a certificate of organization. Before starting your business as a C corporation, you must file a certificate of organization with the tax agency in your country or state and pay an application fee. The agency will mail you a registration article once you have correctly registered.
  • Get an Employer Identification Number (EIN) and banking information. The IRS will only issue companies with an Employer Identification Number (EIN) and a commercial bank account.
  • Make a business agreement. Each entity level has different operating rules and regulations. A C corp’s rules identify its shareholders, restrict the number of shareholders, and establish financial distribution criteria.
  • Have a business representative. A C corporation must have a local representative who handles legal and tax paperwork on the company’s behalf.
  • Establish a board of directors. A C corporation should have an executive board of directors voted by the company’s shareholders. The board members are responsible for managing the corporation, making major business decisions, hiring, firing, managing officers, etc. 
  • Give out stock certificates. Shareholders are C corp owners, and they should be issued company shares indicating their ownership position in the corporation.

It’s also important to keep up with changes in tax rules and regulations, which can occur at any level. This can be particularly challenging if your company has multiple locations in different states, requiring you to follow tax rules in each jurisdiction.

The bottom line

A C corporation is the right corporate type for your company if you want to attract many investors, work with international partners, or sell internationally. If you choose to file your business as a corporation, it’s extremely important to be aware of C corp filing requirements, keep yourself updated on the tax rules and tax changes, and keep in hand the most suitable accounting tools to help your business prepare and file taxes accurately. 

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What to Do if You Duplicate Filing Tax Returns?

Tax forms and submission can be time-consuming and confusing for many taxpayers in the US. At some point, you might wonder what happens if you duplicate filing tax returns unintentionally or you need to change an error on your original returns. 

This article will help you answer what to do if you duplicate tax returns and how to correct if you made a mistake on your original tax forms. 

What happens if I duplicate filing tax returns?

The most common concern for most people who discover they have duplicated their tax returns is whether they will be fined.

If you find yourself in this situation, you’ll be happy to hear that you won’t have to pay taxes again in the same year. Individuals who unintentionally file two tax returns won’t also get fined. You wouldn’t face any consequences if you filed your taxes correctly and didn’t under-report your income, even if you completed them twice.

Only people who submit their taxes late or avoid paying their taxes are subject to financial tax penalties.

However, the IRS does not accept filing two federal tax returns. Since your Social Security Number (SSN) has been used to file only one return, the IRS will only accept the first one and automatically reject any additional return filed with that SSN. 

They will also review the highlighted form to determine if the double filing was an error, a sign of fraudulent activity, or an effort at financial crimes. After that, you will probably receive an error code about the second one explaining why it got rejected. 

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What to do if you accidentally duplicate filing tax returns? 

If you accidentally submitted your taxes multiple times, but it does include the same data on both applications, you usually don’t need to do anything else.

When the IRS receives your subsequent tax return, it will review the double filing and will most probably conclude that it was found to be false. In this case, the IRS will immediately dismiss the second form, and you will most likely receive a warning message informing you of this.

On the other hand, if you submit a subsequent tax return to fix a problem on the first, you must file a tax return update using a different form to change errors or oversights in the original return. You need to file and submit Form 1040-X on paper because this form isn’t available online. 

Typically, you will not need to do anything additional at this point. If you previously duplicated your tax returns by email, it may take weeks or months for the IRS to review the two different forms and alert you of the denial. At this point, they should have received your Form 1040-X. After the review, you should ask for confirmation that the data on the initial update has been amended.

If you haven’t heard back from the IRS regarding your updated tax return after three weeks, you should call the IRS’s hotline for customer support. It’s a good idea to track your Form 1040-X‘s progress to be aware of the next steps.

The bottom line

If you don’t want to find yourself wondering what happens if you duplicate filing tax returns, you should consider asking a tax professional to prepare and check your return. A tax professional can help you avoid mistakes in tax filing and even make the best out of your deductions. 

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About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!

What Is Tax Credit? A Basic Guide To Tax Credits 

Many people know that tax credits can help lower the amount of tax money you owe to the IRS. 

But what exactly are tax credits? How do they work? 

Let’s scroll down to find out!

What is a tax credit? 

A tax credit is a dollar-for-dollar reduction in a taxpayer’s final tax bill.

Generally, a tax credit is created to promote or reward certain kinds of conduct that the government deems advantageous to the economy, the environment, or any other essential goal. For instance, you can claim a tax credit if you install solar panels for home use to save energy and protect the environment. 

How does a tax credit work? 

As previously mentioned, a tax credit lowers the income tax you owe dollar-for-dollar. What does that really mean? Well, take a look at this example: 

Suppose that you have to pay $2000 taxes and have a $2000 tax credit—that means your tax will be subtracted to zero, and you will be totally tax-free!

This is also what makes a tax credit different from a tax deduction. A $2000 tax deduction only lowers your taxable income (the amount of income on which you owe taxes), not your final tax bill, by $2,000. So, if you fall into the 22% tax bracket, a $2,000 deduction would save you $440.

What are the different types of tax credits? 

There are three types of tax credits: nonrefundable, refundable, and partially refundable. Below are brief explanations of each tax credit category:

1. Refundable tax credits

As the name suggests, you may get a refund from the IRS with refundable tax credits. For instance, if you have $2000 tax due and a $3000 refundable tax credit, you would receive a $1000 refund. 

The most popular refundable tax credit is probably the earned income tax credit (EITC). The EITC is a tax credit for low- to moderate-income workers who meet specific requirements regarding family size, filing status, and income.

2. Nonrefundable tax credits

A nonrefundable credit refers to a credit that can only be used to reduce your taxes maximum to $0. It can’t go any lower than that to create a negative tax liability, in which case you’ll get a refund. So, if you’re eligible for a $1000 nonrefundable tax credit, and the tax you owe is only $600—the $400 excess is nonrefundable. Some frequently claimed nonrefundable tax credits are lifetime learning credit (LLC), foreign tax credit (FTC), general business credit (GBC), etc. 

3. Partially refundable tax credits 

Partially refundable tax credits only reduce a certain amount of your taxes and leave the remaining nonrefundable. The American Opportunity credit, for example, is a partially refundable tax credit that allows you to pay up to 40% of the credit as a tax payment. If you calculate a $1,000 American Opportunity credit, you can claim up to $400 as a refundable tax credit and the rest as a nonrefundable credit.

Want to know more about finance? 

If you’d like to explore more entrepreneurship stories, get simple explanations of complex financial terms, or learn about the best productivity tools, find more posts like this on the Shoeboxed blog.


About Shoeboxed

Shoeboxed is a receipt management application that turns your receipts and business documents into a digital format in just one click by taking a picture straight from your smartphone or scanning a pdf. It automatically extracts, categorizes, and human-verifies important data from your receipts so that you can go over and check your records anytime with ease. Shoeboxed ensures you will always have your receipts securely stored and ready for tax purposes.

Access your Shoeboxed account from your web browser or smartphone app. Stay audit-ready with Shoeboxed for FREE now!