Taxes Paid by Corporations
A corporation is a business that operates as a separate entity from its owners. The corporation is taxed separately from its owners and the owners are not personally liable to pay the corporation's taxes, unless they have done something which destroys the separation between owners and corporation (this is called "piercing the corporate veil.")
Here are the taxes paid by a corporation:
Federal and State Income Taxes
The corporation pays federal income tax by first reporting its revenue and expenses and the resulting profits/losses on Form 1120. Corporation taxes are due and payable on the 15th day of the third month after the end of the company's fiscal (financial) year.
Self-employment Taxes
The owners of a corporation are shareholders and they receive dividends as a return on their investment. The owners also are employees, and they are not considered to be self-employed. The owner/employees must have federal and state income taxes withheld from their pay and have FICA/Medicare deducted from their pay, in the same manner as other employees.
Employment Taxes
A corporation must pay employment taxes, including withholding and reporting federal and state income taxes, paying and reporting FICA (Social Security and Medicare) taxes, worker's compensation taxes, and unemployment taxes.
Property Taxes
If the corporation owns a building or other real property, property taxes are required to be paid on this property.
State Sales, Excise, and Franchise Taxes
Corporations are required to pay state sales taxes and excise taxes in the same manner as other business types. Check with your state department of revenue for more information on sales and excise taxes.
Franchise Taxes
Some states levy franchise taxes on corporations each year. Check with your state department of revenue to see if your state requires these taxes.
