Because a corporation is a separate legal entity from its owners, it is taxed differently than other business structures. Corporate tax is often incorrectly used to mean corporate federal income tax, but it encompasses more than that.
What is a corporate tax?
A corporate tax is any tax from a government body that is placed upon a corporation. It can be a federal, state, or local tax. It can be an income tax, inventory tax, sales tax, excise tax, payroll tax, etc. It can be a tax that is unique to corporations or one that is levied on all businesses.
The rules for applying the tax may be different based on the business entity. For example, income tax is levied against all businesses, but the rules of application are different for a corporation.
Understand Corporate Income Tax
Federal corporate income tax is the most complicated of these taxes. A corporation is taxed under federal income tax rules on all profits that cannot be deducted as business expenses. Taxable monies are retained earnings and dividends distributed to shareholders. Federal tax rates on corporate taxable income range from 15% to 35%.
The government provides many tax deductions and tax credits to reduce the taxes for corporations. These are incentives to make businesses profitable and to keep them developing new products and methods in order to keep America financially fit. Corporations can take advantage of these to keep their taxes lower.
Reduce Your Corporate Tax Burden
Every year there are companies paying far more taxes than necessary. They don’t take advantage of the deductions and credits available to them either because they don’t know about them, or they don’t know how to qualify for them.
It is a good financial decision to talk with a tax attorney about:
- Strategic tax planning
- Claiming all the tax deductions and tax credits you can
- Document retention
- Being prepared for a tax audit
- Looking for additional tax deductions and credits for the future
Seek Help with Confidence
At Brunsdon Law Firm we offer you quality, experienced counsel. Contact us today to get the answers to your corporate tax questions or to begin strategic tax planning. Ask for an appointment with Terri Brunsdon, a tax lawyer with years of experience. Terri is both a CPA and an attorney. She has her master’s degree in Tax. Terri has written text books on accounting software and helped hundreds of companies with tax questions. Her expertise is waiting to help you.