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You can avoid double taxation by electing S corp status for your corporation. C corporations file taxes on Form 1120. S corporations file taxes like a sole proprietorship or a partnership. The profits (or losses) pass through an S corp to the shareholders, who pay taxes and report them on their personal tax returns.
Use Form 1120-S to report the income, gains, losses, deductions, credits, etc., of a domestic corporation or other entity for any tax year covered by an election to be an S corporation.
Providers and Large Taxpayers authorized to participate in the Internal Revenue Service e-file program can file Forms 1120 (U.S. Corporation Income Tax Return), 1120-F (U.S. Income Tax Return of a Foreign Corporation), and 1120-S (U.S. Income Tax Return for an S Corporation) through Modernized e-File.
Use Form 1120-S to report the income, gains, losses, deductions, credits, etc., of a domestic corporation or other entity for any tax year covered by an election to be an S corporation.
Regular corporations file Form 1120 and S corporations will use Form 1120S. The shareholders of S corporations must also file a Schedule K-1 form in order to report their portion of corporate losses and income.
Step 1: Name Your Maine LLC. It is important that your Maine LLC has a name that attracts customers and follows Maine naming requirements. ... Step 2: Choose a Registered Agent. ... Step 3: File the Maine Certificate of Formation. ... Step 4: Create an Operating Agreement. ... Step 5: File Form 2553 to Elect Maine S Corp Tax Designation.
The difference is that Form 1120 is used by C corps (which are liable for corporate federal taxes), while Form 1120-S is used exclusively by S corps. In contrast to C corps, S corps are exempt from corporate federal taxes due to income, credits, deductions, and losses being passed through to shareholders.
To convert to a different type of corporate tax return (e.g., 1120 to 1120S) go to File > Client Properties > Federal tab, use the 1120 drop-down menu to select the new return type and click OK.