Corporate income tax is an ever-changing, complicated field of study. New laws and court rulings continually change the interpretation of the tax code on the federal, state, and local levels. This makes it difficult for busy corporate leadership to keep up with all the changes. The advice of a tax attorney from Brunsdon Law Firm can bring peace of mind by being sure the company is tax compliant and is avoiding costly penalties while reaping all available deductions and tax credits.
Federal corporate income tax is not the same as individual income tax. There are two rules that apply:
- Corporate income tax is based on the net income, not the gross. Deductions are allowed for the costs of doing business. Income includes money earned abroad.
- Corporate income tax applies to not all businesses, but only to ones that are chartered as Corporations. Partnerships and Sole Proprietorships have a different set of rules.
Reduce Your Federal Corporate Income Tax
Many companies are paying too much income tax because they are not taking advantage of all the deductions and credits available to them.
According to USA Today, the federal corporate tax rate is listed at 35%, but in reality, companies usually pay far less than the published rate because of loopholes and subsidies. In order to keep your rates as low as possible, talk with a knowledgeable tax advisor about the things you may be able to do to reduce your tax burden.
Get Money-Saving Advice on Your Income Taxes
Important areas to discuss with your tax advisor include:
- Timing of income
- Tax exemptions
- Limitations of tax deductions
- Applicability of any new laws or rulings
- Tax credits available, especially those for research
- Rules for subsidiaries
- Deductions for income made abroad
Watch for Changes in Taxes
In 2014, Ohio has changed the required taxes at the state level, making the state an attractive place for incorporating a business.
Ohio uses the commercial activity tax (CAT) or the financial institution tax (FIT). In tax year 2014, Ohio no longer required the corporation franchise tax, a business privilege tax that has been in existence since 1902. The CAT tax is .26% of the corporate gross revenue. Ohio levies the CAT tax on every business entity including Corporations, LLC, and Partnerships. The minimum payment is $150.
Remember the Local Corporate Income Tax
Local corporate income taxes vary by jurisdiction. Most localities have their own set of requirements for taxation. Consult your tax advisor/attorney for these details.
Get Help with Your Corporate Income Tax
Contact us at Brunsdon Law Firm for help with your tax returns or your tax planning. Request an appointment with Terri Brunsdon, who is not only a CPA and an attorney, but also has her Master’s in Tax. Terri has authored several books on accounting software while working with companies of all sizes to give them the advice they need to succeed.
Terri is an experienced business law attorney and can give you peace of mind in preparation for an audit, appeal a tax decision, or bring you into compliance with tax debt resolution. Make an appointment today to discuss all your tax concerns.