C Corporation – Form 1120
C corporations are required to file a return whether or not the corporation has any taxable income. The filing deadline is the 15th day of the third month after the end of the corporation’s tax year end. The filing date for a corporation keeping their books on a calendar year is March 15.
Income is taxed at the corporate level. Profits are distributed to shareholders as taxable dividend, creating a “double taxation.” Losses are not passed through to shareholders. Net operating losses may be carried back and/or then forward in the corporation return.
The State of California treats C Corporations the same as the IRS.
S Corporation – Form 1120S
S corporations are required to file a return whether or not the corporation has any taxable income. The filing deadline is the 15th day of the third month after the end of the corporation’s tax year end. The filing date for a corporation keeping their books on a calendar year is March 15.
Income is passed through to shareholders and taxed as ordinary income on the shareholder’s individual tax returns. Business losses are also passed through to shareholders and treated as ordinary losses on their tax returns.
The State of California has a fixed annual fee of $800.
Partnership – Form 1065
An unincorporated organization with two or more members is a partnership by default for federal tax purposes if its members carry on a trade, business, or financial operation and divide profits. Typically, a partnership is formed under a written agreement as one of the following: 1) General partnership; 2) Limited partnership; and 3) Limited Liability partnership.
Every partnership must file a return showing its income, deductions and other required information. Income and losses are passed through to the partners on Forms K-1.
The filing deadline for Form 1065 is the 15th day of the fourth month following the end of the tax year. The filing date for a partnership keeping their books on a calendar year is April 15.
Limited Liability Company (LLC)
Depending on elections made by the LLC, and the number of members, the IRS will treat an LLC as either a partnership, a disregarded entity, or as a corporation.
An LLC with at least two members is classified as a partnership for federal income tax purposes. An LLC classified as a partnership is subject to the same filing and reporting requirements as a partnership using Form 1065.
An LLC with only one member is treated as an entity disregarded as separate from its owner for federal income tax purposes. This means that the income and deductions of the LLC are reported on a Schedule C and filed with the LLC member’s individual tax return Form 1040. The State of California still requires the LLC to file a Form 568, Limited Liability Company Return of Income.
An LLC with either a single member or multiple members can elect to be taxed as a corporation (C or S) for federal tax purposes. They are subject to the same filing and reporting requirements as a corporation using either Form 1120 or 1120S.