Picking up Nickels

Tuesday, February 20, 2007

My 2006 S Corporation taxes are finally done!

With a sigh of relief, I finally finished all of my S Corp-related tax filings and payments for 2006.

This is a bit of a tedious process, but I offload the heavy lifting onto my trusty CPA. Here's a rundown what I have to complete by March 15th every year:

  • Complete Form 1120S, U.S. Income Tax Return for an S Corporation.
  • Complete Form 1120S, Schedule K-1: This contains my share of the corporation's items of income/loss (100% as the sole shareholder), credits and deductions, and other information for tax year 2006.
  • Complete state tax return and pay annual excise tax.
  • Fund final 2006 pension/profit sharing contribution.
  • File 2006 corporate annual report with the state of residence: This documents things like the name and address of the corporation, its officers, stock issued, and a description of the business for the state I live in.

My personal tax returns are next on the to-do list. My S corporation turned a profit this year, so I will need to include the income from my K-1 statement on my personal returns. While I will probably have to write a check to the tax man this year, I should be fine since I will be able to take a distribution from my 2006 S corporation profits once the dust settles.

4 Comments:

  • Do I have to take a distribution from my S-corp if I made a profit? I would rather leave it in the company to reinvest. The profit in was in the millions?

    By Blogger Faneeza, at 3/28/07, 5:14 PM  

  • Nope, you are not required to take a distribution from your S Corp profits. You obviously have to pay tax on the profit though.

    Millions in profit? Assuming you're not yanking my chain, want to hire a highly paid assistant? :)

    By Blogger Frugal Frugalson, at 3/29/07, 10:22 AM  

  • I am just in debate with my CPA. Even though the profits are distributed, it's still consider profits on the books. So if I kept it or distributed it I will still have to pay tax on it correct?

    By Blogger Faneeza, at 3/29/07, 11:23 AM  

  • Yes, you must pay tax on your S Corp profit (less allowed deductions). If there was a way around that I'm sure that my CPA would have filled me in. :)

    Of course, you could always allocate that money toward capital expenditures to expand your business and take advantage of the appropriate tax deductions.

    By Blogger Frugal Frugalson, at 3/29/07, 1:20 PM  

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