It is the major responsibility of every business to prepare the tax return for the year or hire corporate tax service to perform this job. But can you do it on your own? Chances are, you’ll need some assistance from professionals, because of the following things.
Factors of Corporate Return
Corporate returns largely depend upon previous year’s return as compared to the typical individual return. Following factors are important:
Net Operating Losses
Depreciation
Accumulated depreciation
Prior year’s information from balance sheet and P&L statement
You also need to send out K-1 forms and 1099-Div forms to corporate offices and shareholders.
You also need to perform a lot of calculation to balance out your return completely.
Essential Requirements
Prior year returns
Form 1120 or 1120S
Current and previous year Balance Sheets
Current and previous year Profit and Loss statements
Assets purchased in current year
Assets worksheet from previous year
So, if you’re doing business in Edmonton, not only you can get the best Book keeping Services Edmonton, but also prepare your return with due diligence, with the help of corporate accountants Edmonton.
Follow this 4-step procedure to prepare the corporate tax return for your business.
Current Year’s Documents
First of all, calculate the total income accumulated in the current year. For that, you need current year’s documents. Enter the following information in the form 1120
Gross sales from P & L statement in the box 1a
Return and allowance in box 1b
Put the difference of 1a and 1b in box 1c
Cost of goods sold from profit and loss statement on line 2 and you will get gross profit in line 3
Rest of the portion belongs to other income generated by your business through interest, dividends, royalties, rents and capital gains or losses. Put their total in line 11.
Taxable Income
Now you need to calculate your expenses from profit and loss statement.
Mention each expense in the second section of 1120
Add all expenses and write the total on line 27
The difference between line 11 and line 27 is your current year’s taxable income.
In case of Net Operating Loss, put the figure in box 28
Now use the tax rate schedule (available in the form) to calculate tax owed and put it in line 31.
Check for overpayments or tax owed in last year’s return. Corporate accountant in Edmonton can help you calculate your taxable income.
Balance Sheet
You will need current and prior year’s balance sheet to complete this balance sheet.
Turn to Schedule L of the form 1120 (schedule A through K serve as worksheet)
Fill the beginning balances for the current year in columns “an” and “b”, on the left side.
Fill column c and d with current year’s information available in the balance sheet.
Reconcile
Reconcile your income in the form with that of in your books. Use Schedule M-1 and fill income based on P&L statement vs. income on a tax return.