S-Corporation Tax Preparation
Why S-Corporation Tax Preparation Matters
S-Corporations offer meaningful tax advantages — but only when filings are handled correctly. From Form 1120-S preparation to shareholder allocations and K-1 reporting, S-Corporation compliance requires precision to avoid IRS issues.
At BlancPeak, we manage the full scope of S-Corporation tax preparation. We ensure accurate filings, properly prepared K-1s, and reasonable compensation structures that meet IRS requirements. The result: compliant returns, reduced risk, and a tax-efficient structure that supports long-term stability.
What's Included
- Federal S-Corporation Return (Form 1120-S)
- Schedule K-1 preparation for shareholders
- Shareholder basis and allocation review
- Guidance on reasonable compensation for owners
- Multi-state S-Corporation tax compliance
We Help With
- Errors in preparing or filing Form 1120-S
- Incorrect shareholder allocations or Schedule K-1 reporting
- Confusion around reasonable shareholder compensation
- Late or missed S-Corporation election filings
- Multi-state compliance issues for S-Corporations operating across jurisdictions
Explore More Tax Preparation Services
- Individual Tax — accurate filings and maximized deductions
- Corporate Tax — compliance and efficiency for corporations
- Partnership Tax — clear, compliant filings with accurate K-1s
- Estate & Trust Tax — filings that protect assets and meet IRS requirements
- Expat Tax — simplified compliance for US citizens abroad
- State & Local Tax — expertise in multi-state and local filings
FAQs: S-Corporation Tax Preparation
S-Corporation tax rules are nuanced and closely scrutinized. These FAQs cover Form 1120-S requirements, shareholder allocations, reasonable compensation, filing deadlines, and compliance risks — so you know when a CPA adds real value and how to keep your S-Corporation in good standing.
What is Form 1120-S, and who must file it?
Form 1120-S is the federal income tax return for S-Corporations. It reports income, deductions, and credits and allocates profits or losses to shareholders through Schedule K-1s. Even if the corporation has little or no taxable income, an annual filing is still required to remain compliant with IRS rules.
How is an S-Corporation different from a C-Corporation for tax purposes?
S-Corporations are taxed as pass-through entities, while C-Corporations are subject to double taxation. S-Corporation income flows directly to shareholders and is reported on their personal tax returns, avoiding corporate-level tax. C-Corporations, by contrast, pay tax at the corporate level and again when profits are distributed as dividends. While S-Corporations offer tax efficiency, they require precise reporting of income, allocations, and shareholder compensation to remain compliant.
What is reasonable compensation, and why does it matter?
Reasonable compensation refers to the salary an S-Corporation must pay owners who actively work in the business. The IRS requires this salary to reflect fair market pay for the services performed before any profit distributions are taken. If compensation is set too low, the IRS may reclassify distributions as wages, resulting in back payroll taxes, penalties, and interest. Setting compensation correctly helps maintain compliance and avoid costly disputes.
What happens if an S-Corporation files late or makes mistakes on Form 1120-S?
Filing late or submitting an inaccurate Form 1120-S can result in penalties assessed per shareholder, which can escalate quickly. Errors in Schedule K-1 allocations may also trigger IRS notices for both the corporation and individual shareholders. Timely, accurate filing is essential to avoid penalties, delays, and unnecessary IRS scrutiny.
Can an S-Corporation lose its status?
Yes. An S-Corporation can lose its S-election if it violates IRS requirements — such as exceeding the 100-shareholder limit, allowing ineligible shareholders, or issuing more than one class of stock. If this occurs, the business is taxed as a C-Corporation, which can significantly increase its tax liability and compliance burden.
Does an S-Corporation need to file state tax returns as well?
Yes. Most states require S-Corporations to file state tax returns, and some tax them differently than the federal government. Requirements vary by jurisdiction, and multi-state operations can create additional filing obligations. Proper state compliance helps avoid penalties, audits, and unexpected tax exposure.
