Update: Originally posted in 2014 but still relevant in 2017!

It’s tax season and I’ve had friends with their own companies ask me what taxes they need to file, so hopefully this post helps you get started. I highly doubt this info will change from year to year, though the forms themselves might – make sure you use the right version.

Disclaimer: I am not an accountant or a lawyer, do your own homework for what your legal requirements are.

Background

To give you a little background, we’re a C-corp started in 2012, incorporated in Delaware and operating in California. In 2013, we’ve had a bit of income and paid employees and independent contractors, so if you’re in a similar boat, this is for you.

Since most of the forms are pretty straightforward, this DIY filing will save you the most money. If you’re in a more complex situation, I recommend using software such as TaxAct or paying an accountant.

What To File

At minimum, you have the franchise and income tax forms for state and federal. These are required even if everything’s zero (and they will refer to other forms to fill out certain fields), so start with these.

• Delaware: Annual report. Franchise tax based on your equity and/or assets – pay minimum of $400. This can be done online through their website. You will need your business entity number and number of shares issued (check with your lawyer).
• Federal: Form 1120, your income tax should be zero if you didn’t make anything or had losses. You will need your federal EIN.
• California: Form 100, there’s a minimum of $800 franchise/income tax. Note that it might be waived for your first year.

You might also consider special cases, for example:

• If you paid a new full-time employee in 2013, you can claim tax credit in CA form 3527.
• If you have a 25%+ shareholder, you may need to file schedule G along with form 1120 (and if the shareholder is foreign, also check if you need form 5472).

Finally, if you paid employees or contractors:

• If you paid money and/or shares to compensate someone, you need to file federal form(s) 1099 and/or W2 by January 31 to the IRS as well as the payee. If you file electronically, you don’t need the summary forms, 1096 and W3. I used Yearli, and it seemed to work fine.
• And of course, if you had any payroll, there’s forms DE9/C for California, and federal form 941, but both of these are at least quarterly.

I had to snail mail the Federal and California returns, and it’s recommended to use certified mail as proof in case something goes wrong. If you guys know of a cheap/easy way to file online, please comment!

Payment is much easier, you can pay through EFTPS and CA FTB for Federal and California taxes respectively…..looks like we know where their priorities are: you can easily pay online, but filing is such a pain!

I hope this helps.

---