The taxing authorities will state that a corporation must act like a business to gain the privileges of a business.
Ensuring your S-Corporation’s compliance with state and federal laws is an ongoing process. It begins with properly electing S corporation status and continues throughout the corporation’s life. Understanding the fundamentals will help you identify areas where your S-Corporation might need to take action to become compliant with applicable laws.
It is important for S-Corporations to create and maintain records of their structure, management, finances, and actions. State laws require that certain records be kept, but corporations should strive to exceed the minimal record-keeping requirements.
Tax compliance for any business is critical. In addition to IRS requirements, businesses in different states will have to adhere to local as well as federal and state laws to stay compliant in their tax filings.
For any corporation to keep up with its local and federal tax laws, it needs a corporate tax plan. This is where a certified tax professional can help.
Once any business establishes itself as a corporation, it has an obligation to prove it as such to the tax authorities.