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Preparing State Corporate Tax Returns

The key to efficient corporate tax returns is to utilize a Certified Public Account (CPA) who will develop a tax strategy that will minimize your company’s tax liability in the short and long term while minimizing the impact on cash flow.

A corporation can file their tax return based on either a Calendar year, beginning January 1 and ending December 31, or a Fiscal year, any 12 month period ending on the last day of the 12th month, except for December. Many corporations that use a fiscal calendar year start in October and end in September.

When preparing for your tax returns, the corporation must report income and deductions based on the annual accounting method used for their calendar year. The general accounting methods used is either Cash Basis or Accrual. The cash basis method of accounting reports income in the tax year it was received and deducts business-related expenses in the tax year it was paid. The Accrual method of accounting reports income in the tax year it was received and deducts business-related expenses in the tax year those expenses accrued.

To prepare for your state corporate tax return, you will need the following documents: A copy of last years state tax return, the filing receipt from the state where your company is incorporated as well as the State Identification Number, the documents filed and accepted by your state if the corporation files as an S corporation, and a copy of your state sales tax certificate. You will need supporting documentation for all gross business income received including interest earned in all business savings, checking, and investment accounts. You will also need either a year end worksheet which includes a trial balance, adjustment entries, income statement, and balance sheet, or a list of itemized business-related expenses which the company has paid or incurred during the year. The itemized expenses would include employees W2 and W3 forms, 1099 forms, and copies of sales tax returns and the corresponding payments. (Rischall)


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