We just started, so there is almost no income and many expenses currently on the books.
✅ TL;DR (Too Long; Didn’t Read)
If you’ve formed an S-Corp, even with no income, you still have to:
File Form 1120S by March 15 each year (or file an extension)
Give each shareholder a Schedule K-1
Report that K-1 on your personal return (Form 1040, Schedule E)
Pay yourself a reasonable salary if you do any work for the S-Corp
Check for state-level taxes or fees (some states charge even with no income)
S-Corps generally don’t pay federal income tax, but that doesn’t mean you’re off the hook. You still have filing responsibilities — and missing them can mean penalties.
📌 Full Answer
If you're new to running an S-Corp, here’s what you need to know:
1. Filing Requirements
Every year, you must file Form 1120S with the IRS
The deadline is March 15 (or the next business day)
If you need more time, file Form 7004 for a 6-month extension
2. How Taxes Work
Your S-Corp is a pass-through entity, so it doesn't pay federal income tax
Profits and losses “pass through” to shareholders
Each shareholder gets a Schedule K-1, showing their portion
That K-1 goes on your Form 1040, Schedule E
3. Reasonable Compensation
If you work for the S-Corp, the IRS expects you to take a reasonable salary
That salary must go through payroll and be taxed accordingly (FICA, Medicare)
Only profits after salary show up on the K-1
4. Quarterly Estimated Taxes
The S-Corp usually doesn’t make estimated tax payments — but you might
If you expect to owe over $1,000 in tax from your K-1 income, you may need to pay quarterly using Form 1040-ES
5. State Taxes
Many states have additional filing requirements or minimum taxes for S-Corps
For example, California charges $800 annually, regardless of income. Check with your state tax authority to stay compliant
6. Penalties for Late Filing
Even if you made no money, you still have to file
IRS penalty: $220 per shareholder per month, up to 12 months
🔍 What Others Got Wrong (or Missed)
❌ “S-Corps pay taxes on all income” – Not true. They pass income through to shareholders.
❌ “Only file if you make money” – Also false. Filing is required every year, no matter your income.
❌ “Use Form 1120-W for estimates” – That’s for C-Corps. S-Corp owners use Form 1040-ES.
❌ “Deadlines depend on revenue” – They don’t. March 15 is the filing deadline for all calendar-year S-Corps.
⚠️ Many answers skipped state-level taxes, which are often due even with no income.
If you need more clarificatoin, please schedule a call with me.
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