The term corporate tax refers to the levy that the government imposes on the profit of a corporation to fund budget expenses. The governing authority applies taxes on the operating earnings of an organization so that the business meets the legal obligation it owes the state. The failure to meet this requirement can result in high penalties and even closure of the enterprise.

You have to deduct all your expenses such as depreciation from revenues to find the operating income. The government imposes taxes on all your income that falls within the tax period.The rules surrounding corporate taxation vary depending on your country or state of origin.

The challenge with some tax professionals is that they don’t know how to write a corporate income tax report. This article shows 5 steps it takes to write your corporate income tax report essay. It will assist you to come up with accurate reports that cannot raise any questions from an auditor or a tax official. It will also protect your organization against violation penalties and possible closure.

Provide a Brief Company Overview

It is paramount to allow the tax filing professional to understand the organization while writing a corporate income tax report. The reason for this is that the government levies taxes depending on the nature of the firm. You may also get some exemptions if your corporation meets a particular criterion. Explain in brief the origin of the organization. Make sure you mention the nature of goods and services that the organization offers.

Describe the location of the business, and if it has branches within the region or in other countries. The description will help the tax person to know whether you are subject to more taxes in other states or countries. You can also talk about your target clients in the report to assist the tax official or auditor to know the organization better.

You can talk about the ups and downs of the corporation. Give a brief history of your tax returns in the last few years plus any challenges that you have been facing. The person going through this report should have a clear picture of the origin and nature of the organization. It’s also good to state the number of employees and their terms of employment in this section. Let the tax official be sure of the kind of taxes your corporation should pay by the time he or she finishes reading this section.

Explain All Sources of Income

Some tax professionals tend to conceal income information with the intention of evading taxes. Be extremely careful as you write your report and make sure you provide all your sources of revenue. It is a good practice to attach supporting documents that give evidence in support. You will be telling the person reviewing the report that you have nothing to hide.

Government officials are always on the look out to confirm the accuracy of the information you provide. State the source and amount of income you received during the tax period. You could also state the tax requirements that accompany each income. This information will form an excellent basis for the justification of your calculations. It also shows the person reviewing that you know what you are doing.

Explain All Expenses

The government levies taxes on the profit of the organization. Net profit is the difference between total income and expenditure. The tax officials always take note of tax experts who try to inflate the amounts of expenses with the aim of reporting lower profits. Make sure you give accurate information of your expenditure. You could provide some supportive documents if there is the need. One of the tools you can effectively use while completing this section is an expense management system. Let the section be precise and leave no questions in the reader’s mind. Make sure the values you state for the cost of goods are very accurate. Any miscommunication can lead to substantial penalties from the tax authority.

  1. Justify Depreciation

Depreciation on machinery is one of the major determinants of tax payable as it has a direct influence on profits. Assets have different rates of depreciation depending on the type of investment. You cannot just make up any figure and state it as the acceptable rate of value reduction on an investment. Overestimating depreciation implies paying less tax. You need to justify why you chose the level of reduction for each machine in your corporate income taxation report. Some tax authorities provide agreeable rates for each category of fixed assets. Make sure you comply with these standards if they exist as the tax officials will always use them.

  1. Show Calculations and Provide a Summary

After taking all the steps above, it’s now time to show your taxable income in the report. Just subtract the total expenditure including depreciation from assets from the total revenue. You may not have so much to justify in this section if the other parts of the report are clear. Make sure you calculate the tax and show the final figure transparently. In case there are any tax exemptions, you can show them in this section. It’s also advisable to refer to a particular act that provides for those exceptions in the law. You should never assume that tax officials or auditors know everything.

It should come out that you have not forged any figures from your corporate tax reporting essay. The report should also give the reader an easy time to understand.It is meaningless to write an essay that will make the person going through it to call you for clarifications. Let your essay be self-explanatory in nature. The worst bit could be when the tax official or corporate auditor feels that you are trying to evade tax by concealing some information. It may destroy not only the reputation of the organization but also your career. You should make sure that you have a precise and accurate tax report essay at all times.