Do I Have to Do a Balance Sheet for an S-Corp Return?

by Ciaran John

You must maintain a balance sheet for your S corporation, and you may refer to this information when you file taxes for the entity. In some instances you have to transcribe all of the information from a balance sheet onto the S corporation tax form. In other instances you do not need to refer to the balance sheet when filing your taxes although you must keep it on file for informational purposes.

S Corporation

S corporations are business entities that do not typically have to pay income tax. A firm's profits are passed onto shareholders, who may have to pay tax on their shares of the firm's earnings. If an S corporation reports a loss, then the shareholders can also claim the loss on their individual tax returns. Profits from other types of corporations are subject to double taxation since both the entity and the shareholders have to pay income tax on the same sum of money. Therefore, S corporations appeal to many small business owners seeking to avoid double taxation.

Balance Sheet

An S corporation's balance sheet includes a detailed list of the firm's assets and liabilities at a particular moment in time. The Internal Revenue Service requires corporations to keep balance sheets as well as profit and loss statements. A balance sheet includes a list of the firm's fixed assets, such as real estate and vehicles, as well as intangible assets, such as intellectual property. Other assets include accounts receivable, inventory and cash in banks. Liabilities include debt payments, wages, taxes and insurance costs. For a firm to remain viable its balance sheet should show its assets exceed its liabilities. A firm becomes insolvent when its liabilities exceed its assets.

Schedule L

Although an S corporation does not usually have to pay taxes, it does have to file federal taxes, which involves the completion of the federal S 1120 form. If the S corporation's total receipts and total assets at the close of the tax year amount to $250,000 or more, then you must complete the schedule L section of the form that includes a detailed summary of everything on the balance sheet. If the business has less than $250,000 in assets or receipts, then you do not need to complete the schedule L. The information listed on the schedule L must precisely match the information listed on the balance sheet. You must keep a copy of the completed tax return and the balance sheet on file for three years since the Internal Revenue Service may choose to audit the business.


Aside from filing federal taxes, your S corporation may have to file a state tax return, and you may need a balance sheet to complete this filing. In Florida S corporations do not typically need to file a tax return whereas in Missouri S corporations must file a return, and firms with more than $10 million in franchise tax liability must pay a state tax. In Massachusetts S corporations with total receipts of $6 million or more are also subject to a state excise tax. Therefore, although you may not have to pay federal tax or use a balance sheet to complete your federal tax forms, you should be sure to check the tax filing rules for your state.

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