Colorado S Corporation Taxes

There is a lot to consider when choosing a Colorado corporation tax structure. It’s important to understand how C-corporations and S-corporations are taxed in order to make the best choice for your business. In addition, you should be familiar with the state’s filing requirements for both types of businesses. An S corp is a federal tax classification that allows companies to pass through profits, losses, deductions, and credits to shareholders for tax purposes. This helps to avoid double taxation and makes it easier for small business owners to manage their taxes.

S corporations file informational tax returns with the IRS using Form 1120S. They must also distribute Schedule K-1 to shareholders, which reports the company’s profits and deductions. This is used to help the shareholders determine their own personal tax liability. S corporations do not pay a corporate income tax in Colorado. However, they must file a DR 0106 tax return each year to keep the state updated on their business information. This report is due three and a half months after the end of the corporation’s tax year.

Do Colorado S-Corps Pay State Income Tax?

Corporations that choose to elect S corp status are not subject to Colorado state income tax. This is because they are treated as a pass-through entity. As such, all company-related income is passed through to shareholders and reported on their personal tax returns. This can help reduce the amount of double taxation that corporations face.

While S corp status can save businesses money on taxes, there are a few things to keep in mind. For example, you must have the right number of shareholders to qualify for the tax benefit. Additionally, you must submit IRS Form 2553 and have all shareholders agree to it. You must also have a valid apportionment formula in place for the year you want to make the election. Colorado has a single-factor apportionment system that is similar to the federal one.

Colorado S-corp Tax Due Dates

If you are a Colorado S corporation, you must file an income tax return if you are doing business in the state of Colorado. This form is similar to the federal tax return, and is due by March 15th (if you use a calendar year) or April 16th if you have a fiscal year. While the corporation itself does not pay any taxes, the profits are reported on the shareholders’ personal tax returns, just like in partnerships and sole proprietorships.