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What is Income Tax Payable?
Income Tax Payable is an account on a company’s ledger where they reserve amounts that will be used to pay the tax liability in the current quarter or year.
This account tends to be separate from payroll taxes and sales taxes. This account will typically be empty at the end of the fiscal year. Corporations must pay income taxes based on their gross income, and the funds to pay them are held in the Income Tax Payable account on their company ledger.
Pass through entities such as certain S-Corps will not pay taxes on behalf of the partnership, but the tax liability will be passed on to the owners or shareholders. C-corporations will always owe corporate income taxes, however, on a Federal and a state level (except in a few states).
Unless the company is making less than $335,000 (as of 2016), the corporation will pay an effective rate of about 34% in Federal income taxes. A company that owns controlling interest in other companies will file a consolidated return for all of the companies. Companies must pay into the estimated withholding amount with quarterly filings.
Corporate income taxes can cause companies to set up in another country with more favorable tax treatments.
What is Accounts Payable for Accounting?
Will My Spouse and Children Receive Social Security Benefits if I Die?
What are futures markets?
Futures markets are the formal exchanges on which futures contracts are bought and sold for financial products
What is Freddie Mac?
Freddie Mac is a government-sponsored company which purchases mortgages from banks and securitizes them for sale
What is Burn Rate?
Burn rate is a term for negative cash flow, or the rate at which a company burns through capital, especially a startup company.
Who is an Account Manager?
Account managers are the point of contact and liaison between a business and its clients
What is a bull call spread?
A bull call spread is a vertical spread that buys and sells calls in a way that benefits from upward price movement
What does Equity or Security Mean in the context of Capital Markets?
An equity generally signifies some level of ownership in a corporation. A security is a broader term, which refers to...
What are trading models?
Trading models are emotionless systems for decision-making in trading that can be automated or just used for reference
What is a No-Appraisal Mortgage?
There are exceptions to this, in the form of no-appraisal mortgages which are available to lower-income homeowners
What is a Settlement Date?
The length of time after a trade is executed that the securities are due delivered and the payment is due paid varies...