Choosing a structure for your business
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For corporations that have a tax year ending Dec. 31, installment payments are due on April 15, June 15, Sept. 15 and Dec. 15. If a corporation's tax year ends on June 30, the installments are due on Oct. 15, Dec. 15, March 15 and June 15.

The IRS allows corporations to calculate installment payments one of two ways. The first requires an installment equal to 25 percent of the income tax the corporation will show on its return for the current year. The second requires that installments are 25 percent of the income tax paid the prior year, as it appears on the corporation's last return.

Unless a corporation volunteers to -- or is required to -- make electronic deposits, payments and a completed Form 8109 are mailed or delivered to an authorized financial institution or to the area Federal Reserve Bank. You can get the form only by calling the IRS at 1-800-829-4933.

The Electronic Federal Tax Payment System (EFTPS) Electronic Federal Tax Payment System is used to make electronic tax deposits. A corporation that has total deposits of more than $200,000 during a calendar year for Social Security, Medicare and withheld income taxes must use EFTPS beginning in the second succeeding calendar year.

If a corporation doesn't use the EFTPS when it is required, the company may be subject to a penalty. Enroll in the EFTPS by calling 1-800-945-8400 or 1-800-555-4477. For general information about the system, call 1-800-829-1040. For more information on corporations, see IRS Publication 542: Corporations.

S Corporation
One way to get around the double-tax whammy of incorporating is to request treatment as an S corporation. A company must meet all of the following requirements to qualify:

1. It must be a domestic corporation.
2. It can only have one class of stock.
3. It can't have more than 75 shareholders. Keep in mind, a husband and wife and their estates are treated as one shareholder.
4. Shareholders can only be individuals, estates (including estates of individuals in bankruptcy) and certain trusts. For tax years beginning after 1997, certain tax-exempt organizations may also be shareholders.
5. It can't have nonresident alien shareholders.
6. It can't be a financial institution using the reserve method of accounting for bad debts.
7. All shareholders must agree to be an S corporation.

An S corporation doesn't pay a tax on its income, but rather passes its income and expenses through to the shareholders. They report these items on their own income tax returns.

An S corporation must file a return on Form 1120S, U.S. Income Tax Return for an S Corporation. This shows the results of the corporation's operation for its tax year and the items of income, gain, loss, deduction or credit that affect the shareholders' individual income tax returns.

The S corporation should send shareholders a copy of Schedule K-1 (Form 1120S) showing their share of income, credits, and deductions of the S corporation for the tax year. Distributive shares of income, gain, loss, deduction, or credit of the S corporation are reported on the appropriate lines and schedules of Form 1040.

For more information on S corporations, see the instructions for Form 1120S.