Oxnard, CA Corporate Tax Attorney + CPA
C corporations, S corporations, and limited liability companies (LLCs) that elect to be taxed as corporations face some of the most complex rules found in the Internal Revenue Code. Corporations are also responsible for complying with state tax laws, which are vigorously enforced by California agencies such as the Franchise Tax Board (FTB), Employment Development Department (EDD) Franchise Tax Board (FTB). There can be costly penalties for failure to comply, placing your business in jeopardy of operational delays, reduced profits, damaged relationships with other vendors, or potentially even bankruptcy not to mention criminal tax exposure if willful noncompliance (tax fraud) is detected.
The best way to avoid penalties, achieve corporate tax compliance, and strategize effectively is to work with an experienced tax professional, like the Oxnard tax lawyers and CPAs at the Tax Law Office of David W. Klasing. With offices in Oxnard, our international and domestic business tax attorneys provide a wide array of tax, legal, bookkeeping and accounting services to California, foreign, and multinational C and S corporations. If you need assistance with a corporation tax issue in California, turn to our Oxnard IRS lawyers for award-winning service supported by more than 20 years of experience.
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What Type of Corporation Should I Form, C or S?
When incorporating a business in California, taxpayers have two options: the C corporation, or the S corporation. Each type of corporation has its own unique set of benefits and drawbacks, depending on the business owner’s short-term and long-term goals, resources, and overall financial strategy. In some instances, the most appropriate structure is the limited liability company (LLC), which, though not technically a corporation, shares many of the corporation’s features, such as protection from personal liability for business debts. Moreover, an LLC can elect to be treated as a C or S corporation or partnership for tax purposes. Our Oxnard business tax attorneys can help you make the right choice, positioning your business for growth from day one.
S Corporations as Pass-Through Entities
S corporations are known as “pass-through” or “flow-through entities,” because the business’ income “passes through” or “flows through” to the individual owners, members, and investors, who report the income on their personal federal tax returns. This stands in contrast to “double-taxation,” discussed in the following section on C corporations.
C Corporations and Double-Taxation
C corporations are taxed differently from S corporations. Unlike S corps, which are pass-through entities, C corps are subject to “double-taxation,” which means dividends are effectively taxed twice: once at the corporate level, and once at the personal level. Corporate income is reported to the IRS by filing Form 1120 (U.S. Corporation Income Tax Return), along with associated forms such as Form 1120-W (Estimated Tax for Corporations).
While a flow-through structure, such as an S corporation, has an advantage in avoiding double-taxation, it is not always the right choice in every financial scenario, making it essential to consult with a knowledgeable entity selection lawyer before you start your business – particularly now that the Tax Cuts and Jobs Act (TCJA) has changed so many tax regulations directly affecting corporations. A third option for business owners may be the LLC, discussed in the section below.
See our Entity Selection Q and A Library
How Are LLCs Taxed?
An LLC is a limited liability company, a flexible “hybrid entity” that merges features associated with both corporations and partnerships – including the option to be taxed as either. LLCs are generally treated as partnerships by default and, in order to be treated as corporations for tax purposes, must file with the IRS Form 8832 (Entity Classification Election). Single-member LLCs can either elect to be treated as corporations, or, otherwise, receive “disregarded entity” status.
State Tax Compliance for California, Foreign, and Online Businesses
Corporations are responsible for filing and paying a myriad of federal taxes, such as federal income and employment taxes, in addition to meeting rigorous recordkeeping requirements. It is equally crucial for corporations and LLCs to comply with state tax laws. Even out-of-state (“foreign”) corporations, including online businesses, can be affected by certain California tax provisions, such as state sales tax regulations, depending on factors like the number of internet transactions that were made. In California, state tax regulations are primarily enforced by three agencies:
- California Department of Tax and Fee Administration (CDTFA) – California sales and use tax
- Employment Development Department (EDD) – California employment tax
- Franchise Tax Board (FTB) – California personal and corporate income tax
Any of these agencies, working alongside or independently from the IRS, may conduct a tax audit of your business if you do not file timely corporate tax returns, do not pay estimated California taxes, underreport business income, understate sales (e.g. engaging in illegal “skimming” practices), or make other corporate tax compliance errors. If your C or S corporation has been selected for a California sales tax audit, a worker classification audit, or any other type of state or IRS audit, our Oxnard tax audit attorneys are here to counsel, protect, and advise your business.
Oxnard, CA Corporate Tax Compliance Lawyers + CPAs for S and C Corporations
Corporate tax compliance is a challenging and complex issue with profound financial ramifications for your business. Before you make another financial decision, consult with a trusted business tax attorney or CPA with decades of experience serving corporations throughout California. To set up a reduced-rate business tax consultation, contact the Tax Law Office of David W. Klasing online, or call our Oxnard tax office at (805) 617-4566. Please note that meetings at our Oxnard location are by appointment only.
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Will it cost me more to hire the Tax Law Offices of David W. Klasing, who’s main office and the vast majority of the firm’s staff is located in Irvine California, but an appointment only Satellite office is close to my location, as opposed to a local company? Absolutely not! See our policies that address this issue here: