C Corporation Tax Guide for Business Owners

Treat the corporation as a separate taxpayer

A C corporation generally files Form 1120 in its own name and pays federal income tax at the entity level. Corporate funds, expenses, assets, and liabilities should be recorded separately from a shareholder's personal activity.

Payments between a corporation and its shareholders require clear classification and support. Wages, expense reimbursements, loans, capital contributions, redemptions, and distributions can have different reporting consequences even when they all move cash between the same parties.

Build a complete Form 1120 preparation file

• Year-end balance sheet, profit-and-loss statement, general ledger, and bank reconciliations
• Corporate formation and ownership records, including stock issuances and changes during the year
• Payroll reports, officer compensation, benefits, and employment-tax filings
• Shareholder contributions, distributions, loans, reimbursements, and related agreements
• Fixed-asset purchases and dispositions, financing records, and prior depreciation schedules
• Federal and state estimated-tax payments, prior returns, notices, and state activity details

Review corporate and shareholder consequences together

Corporate income, losses, and distributions do not follow the same rules as pass-through entity items. Before making an owner payment or changing how the business is taxed, consider the corporation's earnings, cash needs, payroll, accumulated tax records, state treatment, and the shareholder's broader facts.

Additional forms or schedules may apply based on the corporation's size, transactions, ownership, international activity, or accounting methods. Current Form 1120 instructions and state guidance should be reviewed for the filing year rather than relying on a prior-year checklist.