Federal & State Taxes
A business entity should pay income taxes in the form of Estimated Tax Liability during the year in which the income earned. After the tax year is over, the business should file annual tax returns as follows.
The taxes imposed on equity-based compensations are poorly understood and have varying tax consequences. We can summarize the accounting of stock-based compensation plans as:
Sole Proprietorship - File Form 1040 along with Schedule C
Partnership - File Form 1065 and issue Schedule K-1 to partners
S Corporation - File Form 1120S and issue Schedule K-1 to shareholders
C Corporation - File Form 1120
