Stefaniy Martynenko

How to prepare annual financial statements for a business in the United States

The submission of tax and financial statements to the United States is strictly regulated by law. If the deadlines are not met, the owner of the company faces a “decent” fine. Sometimes criminal liability is also possible if the regulatory authorities consider it an attempt at tax evasion. In the United States, this is considered a serious crime and has extremely negative consequences.

Most often, US companies submit their reports through the official website of the Internal Revenue Service (IRS), the internal tax authority of the United States. It has a fairly intuitive interface that is translated into 20 different languages. There you will find all the necessary forms and instructions, explanations and comments to them. However, despite its simplicity, it is still better to entrust your company’s reporting system to specialists. We will explain why below.

Financial reporting forms for US companies

The main tax return for individual taxpayers is Form 1040. It is used to report income and tax payments for a calendar year. Here are the main points related to it:

  • There are several versions of Form 1040: 1040-ES, 1040-SR, which offer different levels of detail and complexity. The taxpayer chooses the appropriate option depending on their situation.
  • Various attachments may be attached to Form 1040. For example, Schedule A is used to itemize deductions and credits, and Schedule B is used to report additional income.
  • Usually, the deadline for filing a Form 1040 tax return is April 15 of the year following the current year. However, if necessary, the taxpayer may request an extension.

Important! If you are not a resident of the country for tax purposes, but you receive income from sources in the United States or have income that is somehow connected with the United States, you must file Form 1040-NR.

And there you have it – the first of many reasons why preparing and submitting financial statements in the United States is such a complex and time-consuming process. It is important not only to follow generally accepted accounting principles (GAAP), but also to take into account the smallest details.

Depending on your specific situation and type of income, you may need different forms and attachments to account for your income and tax liabilities.

For example, Form 1099-INT is used to report interest income, Form 1099-DIV is used to report dividends, and Form 1099-MISC is used to report miscellaneous income.

Form W-8BEN is used to certify that a person who is not a U.S. citizen or resident is not required to pay taxes on income derived from U.S. sources.

Form 1042-S is used to record income subject to withholding tax: interest from investments, dividends, rents, etc.

In general, the documentation requirements depend on the company’s legal form, specifics of its activities, state of registration, and other factors.

Reporting requirements

They may vary depending on the type of business, its size, legal form, industry, etc. Let’s describe the important aspects in a general way:

Financial. Most businesses must submit financial statements, which include a balance sheet, income statement, and cash flows. The documents must be prepared in accordance with Generally Accepted Accounting Principles (GAAP).

Taxation. Companies must file tax returns both at the federal level and in accordance with the laws of the chosen state. This includes: income tax returns (for corporations), income tax returns (for individual entrepreneurs and partnerships), and other forms of tax reporting.

To regulatory authorities. Certain companies, especially those that are publicly traded or operate in certain industries, are required to file reports with regulators: Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA) and others.

Labor and health and safety standards. Companies may also be required to report on their activities in relation to labor standards, health and safety, and other aspects related to employee rights.

Additional documentation requirements may include submission of information on corporate governance, financial audit and other aspects, depending on the specific situation and regulation.

Reporting services in the United States

You have probably already come to the conclusion that it is much more practical to outsource the preparation of financial and tax reports. This will allow you to concentrate on the company’s core business, avoiding the risk of penalties and legal problems.

In addition, specialists with sufficient experience in this area will help you identify potential financial risks and obtain other valuable information (for example, on tax refunds and reduction of current liabilities).

We have been registering and servicing companies in the United States for more than 30 years. Among other competencies, we also offer preparation and preparation of financial statements.

We will not only take the burden of preparing reports in America off your shoulders, but will also be useful in many other aspects:

  • adapt to changes in your business needs or changes in legislation;
  • Improve transparency and accuracy, which in turn helps to increase trust from investors, clients and other stakeholders;
  • Gain assurance that all documentation is completed correctly and in accordance with applicable standards;
  • strategically reduce tax liabilities.

If you would like to use our services, please fill out the form below or contact us in any other convenient way.

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