𝐇𝐨𝐰 𝐭𝐨 𝐅𝐢𝐥𝐞 𝐅𝐨𝐫𝐦 𝟏𝟏𝟐𝟎 𝐚𝐧𝐝 𝟏𝟏𝟐𝟎-𝐒 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐓𝐚𝐱 𝐒𝐞𝐚𝐬𝐨𝐧: 𝐀 𝐒𝐭𝐞𝐩-𝐛𝐲-𝐒𝐭𝐞𝐩 𝐆𝐮𝐢𝐝𝐞

𝐇𝐨𝐰 𝐭𝐨 𝐅𝐢𝐥𝐞 𝐅𝐨𝐫𝐦 𝟏𝟏𝟐𝟎 𝐚𝐧𝐝 𝟏𝟏𝟐𝟎-𝐒 𝐟𝐨𝐫 𝐭𝐡𝐞 𝐓𝐚𝐱 𝐒𝐞𝐚𝐬𝐨𝐧: 𝐀 𝐒𝐭𝐞𝐩-𝐛𝐲-𝐒𝐭𝐞𝐩 𝐆𝐮𝐢𝐝𝐞

Filing taxes is a critical responsibility for businesses, and for corporations, this means navigating Form 1120 or 1120-S. Understanding the differences between these forms, gathering the required documents, and filing them correctly can save your business from potential penalties and maximize tax benefits. Here’s everything you need to know for this tax season. 

𝐖𝐡𝐚𝐭 𝐀𝐫𝐞 𝐅𝐨𝐫𝐦𝐬 𝟏𝟏𝟐𝟎 𝐚𝐧𝐝 𝟏𝟏𝟐𝟎-𝐒?

𝐅𝐨𝐫𝐦 𝟏𝟏𝟐𝟎: This is the U.S. Corporation Income Tax Return used by C Corporations to report income, gains, losses, deductions, and credits. Corporations must calculate their tax liability and pay the applicable taxes. 

𝐅𝐨𝐫𝐦 𝟏𝟏𝟐𝟎-𝐒: This form is used by S Corporations to report income, deductions, and credits. Unlike C Corporations, S Corporations pass through income and losses to shareholders, who report them on their personal tax returns. 

The key difference between 𝐂 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬 and 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬 lies in how they are taxed and structured:

𝐂 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧:

① Pays taxes on its profits as a separate legal entity.

② Owners (shareholders) also pay taxes on any dividends they receive (double taxation).

③ No limit on the number or type of shareholders.

𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧:

① Passes its profits and losses directly to the owners' personal tax returns (avoids double taxation).

② Limited to 100 shareholders, all of whom must be U.S. citizens or residents.

Both provide liability protection for their owners, but the S Corporation is more tax-efficient for small businesses, while the C Corporation suits larger businesses or those seeking outside investors.

Here’s a simple breakdown of why an S Corporation is more tax-efficient for small businesses and a C Corporation is better for larger businesses or those seeking outside investors.

𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 (𝐒𝐦𝐚𝐥𝐥 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬 𝐅𝐫𝐢𝐞𝐧𝐝𝐥𝐲)

☑️ 𝐏𝐚𝐬𝐬-𝐓𝐡𝐫𝐨𝐮𝐠𝐡 𝐓𝐚𝐱𝐚𝐭𝐢𝐨𝐧:

The company's profits and losses go directly to the owners' personal tax returns. This avoids the "double taxation" seen in C Corporations (where the company is taxed, and then shareholders are taxed on dividends).

☑️ 𝐍𝐨 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐓𝐚𝐱:

Since profits are passed through, the business itself doesn’t pay federal income tax, saving money for small businesses.

☑️ 𝐋𝐢𝐦𝐢𝐭𝐞𝐝 𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫𝐬:

S Corporations can have up to 100 shareholders, making them ideal for smaller, closely held businesses.

☑️ 𝐎𝐰𝐧𝐞𝐫𝐬𝐡𝐢𝐩 𝐑𝐞𝐬𝐭𝐫𝐢𝐜𝐭𝐢𝐨𝐧𝐬:

Only U.S. citizens or residents can own shares, and there can only be one class of stock, simplifying operations for smaller companies.

𝐂 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 (𝐋𝐚𝐫𝐠𝐞𝐫 𝐁𝐮𝐬𝐢𝐧𝐞𝐬𝐬/𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫 𝐅𝐫𝐢𝐞𝐧𝐝𝐥𝐲)

☑️ 𝐀𝐛𝐢𝐥𝐢𝐭𝐲 𝐭𝐨 𝐀𝐭𝐭𝐫𝐚𝐜𝐭 𝐈𝐧𝐯𝐞𝐬𝐭𝐨𝐫𝐬:

C Corporations can have unlimited shareholders and issue multiple classes of stock, making them appealing for venture capital or public stock offerings.

☑️ 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐓𝐚𝐱 𝐑𝐚𝐭𝐞𝐬:

While the corporation itself is taxed, the recent lower corporate tax rates may make this manageable for high-earning businesses.

☑️ 𝐑𝐞𝐭𝐚𝐢𝐧𝐞𝐝 𝐄𝐚𝐫𝐧𝐢𝐧𝐠𝐬:

C Corporations can retain earnings in the business without passing them to shareholders, which helps fund growth or expansion.

☑️ 𝐆𝐥𝐨𝐛𝐚𝐥 𝐎𝐰𝐧𝐞𝐫𝐬𝐡𝐢𝐩:

There are no restrictions on who can own shares, allowing for broader investment opportunities.

In short, S Corporations save taxes for small businesses with fewer owners, while C Corporations offer flexibility for growth and attracting investors, despite higher tax obligations.

𝐒𝐭𝐞𝐩 𝟏: 𝐃𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐞 𝐘𝐨𝐮𝐫 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧 𝐓𝐲𝐩𝐞 

Before filing, confirm whether your business is a C Corporation or an S Corporation. Your corporation’s type determines which form to file: 

• C Corporations file Form 1120. 
• S Corporations file Form 1120-S. (Note: To be an S Corporation, your business must have filed Form 2553, Election by a Small Business Corporation, and been approved by the IRS.) 

𝐒𝐭𝐞𝐩 𝟐: 𝐆𝐚𝐭𝐡𝐞𝐫 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐝 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐬

Having all necessary documents organized ensures a smooth filing process. Here’s a checklist of documents you’ll need.

𝐅𝐨𝐫 𝐁𝐨𝐭𝐡 𝐂 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬 𝐚𝐧𝐝 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬:

𝟏. 𝐄𝐦𝐩𝐥𝐨𝐲𝐞𝐫 𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐍𝐮𝐦𝐛𝐞𝐫 (𝐄𝐈𝐍): Your business’s unique identifier issued by the IRS. 

𝟐. 𝐅𝐢𝐧𝐚𝐧𝐜𝐢𝐚𝐥 𝐒𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭𝐬: Income statement (profit and loss statement), Balance sheet 

𝟑. 𝐁𝐚𝐧𝐤 𝐒𝐭𝐚𝐭𝐞𝐦𝐞𝐧𝐭𝐬: For the tax year to reconcile income and expenses. 

𝟒. 𝐏𝐚𝐲𝐫𝐨𝐥𝐥 𝐑𝐞𝐜𝐨𝐫𝐝𝐬: If applicable, including wages paid to employees and taxes withheld. 

𝟓. 𝐄𝐱𝐩𝐞𝐧𝐬𝐞 𝐑𝐞𝐜𝐨𝐫𝐝𝐬: Receipts and invoices for operational expenses, such as rent, utilities, and supplies. 

𝟔. 𝐃𝐞𝐩𝐫𝐞𝐜𝐢𝐚𝐭𝐢𝐨𝐧 𝐒𝐜𝐡𝐞𝐝𝐮𝐥𝐞𝐬: Details of any assets your corporation is depreciating. 

𝟕. 𝐋𝐨𝐚𝐧 𝐚𝐧𝐝 𝐃𝐞𝐛𝐭 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐬: Include interest paid during the tax year. 

𝟖. 𝟏𝟎𝟗𝟗 𝐅𝐨𝐫𝐦𝐬: For any independent contractors you’ve paid. 

𝐀𝐝𝐝𝐢𝐭𝐢𝐨𝐧𝐚𝐥 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐬 𝐟𝐨𝐫 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬

𝟏. 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧: Names, addresses, and Social Security Numbers (SSNs) of all shareholders. Shareholder’s ownership percentage. 

𝟐. 𝐊-𝟏𝐬 (𝐒𝐜𝐡𝐞𝐝𝐮𝐥𝐞 𝐊-𝟏): This form reports each shareholder’s share of income, deductions, and credits. 

𝟑. 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐃𝐢𝐬𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬: Payments made to shareholders. 

𝐒𝐭𝐞𝐩 𝟑: 𝐅𝐢𝐥𝐥 𝐎𝐮𝐭 𝐭𝐡𝐞 𝐅𝐨𝐫𝐦

𝐅𝐨𝐫𝐦 𝟏𝟏𝟐𝟎 (𝐂 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬)

𝟏. 𝐁𝐚𝐬𝐢𝐜 𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧: Fill out your corporation’s name, address, EIN, and date of incorporation. 

𝟐. 𝐈𝐧𝐜𝐨𝐦𝐞 𝐒𝐞𝐜𝐭𝐢𝐨𝐧: Report total income, including sales, services, interest, and other revenue sources.

𝟑. 𝐃𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬 𝐒𝐞𝐜𝐭𝐢𝐨𝐧: List operational expenses, such as salaries, rent, and depreciation.

𝟒. 𝐓𝐚𝐱 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐲: Calculate the corporation’s taxable income and applicable taxes.

𝐅𝐨𝐫𝐦 𝟏𝟏𝟐𝟎-𝐒 (𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬)

𝟏. 𝐁𝐚𝐬𝐢𝐜 𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧: Include your corporation’s name, address, EIN, and date of incorporation.

𝟐. 𝐈𝐧𝐜𝐨𝐦𝐞 𝐚𝐧𝐝 𝐃𝐞𝐝𝐮𝐜𝐭𝐢𝐨𝐧𝐬: Report income and expenses.

𝟑. 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 𝐃𝐢𝐬𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬: Use Schedule K to list shareholder allocations and attach Schedule K-1 for each shareholder.  

𝟒. 𝐓𝐚𝐱 𝐂𝐚𝐥𝐜𝐮𝐥𝐚𝐭𝐢𝐨𝐧: S Corporations generally do not pay taxes at the corporate level, but ensure all information passed through to shareholders is accurate. 

𝐒𝐭𝐞𝐩 𝟒: 𝐅𝐢𝐥𝐞 𝐭𝐡𝐞 𝐅𝐨𝐫𝐦

𝟏. 𝐂𝐡𝐨𝐨𝐬𝐞 𝐚 𝐅𝐢𝐥𝐢𝐧𝐠 𝐌𝐞𝐭𝐡𝐨𝐝:

• 𝐄-𝐟𝐢𝐥𝐢𝐧𝐠: The IRS encourages electronic filing for faster processing and refunds.
• 𝐌𝐚𝐢𝐥: If filing by mail, send the form to the appropriate IRS address for your state.

𝟐. 𝐀𝐭𝐭𝐚𝐜𝐡 𝐍𝐞𝐜𝐞𝐬𝐬𝐚𝐫𝐲 𝐒𝐜𝐡𝐞𝐝𝐮𝐥𝐞𝐬 𝐚𝐧𝐝 𝐅𝐨𝐫𝐦𝐬:

• 𝐂 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬: Include Schedule G, Schedule J, and others as applicable.
• 𝐒 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐢𝐨𝐧𝐬: Include Schedules K and K-1.

𝟑. 𝐑𝐞𝐯𝐢𝐞𝐰 𝐟𝐨𝐫 𝐀𝐜𝐜𝐮𝐫𝐚𝐜𝐲: Double-check all entries and calculations to avoid delays or penalties. 

𝐒𝐭𝐞𝐩 𝟓: 𝐌𝐞𝐞𝐭 𝐭𝐡𝐞 𝐃𝐞𝐚𝐝𝐥𝐢𝐧𝐞

𝐃𝐞𝐚𝐝𝐥𝐢𝐧𝐞 𝐟𝐨𝐫 𝐅𝐢𝐥𝐢𝐧𝐠

• Calendar-year corporations must file by April 15, 2025.
• Fiscal-year corporations must file by the 15th day of the fourth month following the end of their fiscal year.
• Extension: If you need more time, file Form 7004 to request a six-month extension.

𝐍𝐞𝐞𝐝 𝐇𝐞𝐥𝐩 𝐅𝐢𝐥𝐢𝐧𝐠? 𝐂𝐨𝐧𝐭𝐚𝐜𝐭 𝐈𝐧𝐬𝐩𝐢𝐫𝐚𝐭𝐢𝐨𝐧 𝐌𝐮𝐥𝐭𝐢-𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬!𝐢𝐧𝐞 𝐟𝐨𝐫 𝐅𝐢𝐥𝐢𝐧𝐠.

Filing Form 1120 or 1120-S can be complex, but you don’t have to do it alone. At Inspiration Multi-Services, we provide expert assistance to ensure your corporate tax return is accurate and timely. Contact us today to schedule a consultation and make this tax season stress-free! 

Visit our office or reach out online to see how our tax professionals can support your business. Services are better with Inspiration!