Be sure that the correct business activity code is shown on Page 1 of Form 1120S each year.
If an S corporation conducts more than one trade or business, a primary business activity code needs to be selected.
Learn the importance of choosing the correct business activity code to ensure that what shareholder-employees report on their individual returns is consistent with what is on the corporation's return.
A business tax return cannot be filed without an IRS business activity code.
Example: There is no IRS business activity code for Internet Service Providers.
Hence, the right business activity code for Internet Service Providers is 514100, the higher-level code for 514191.
Also, the principal business activity codes
on the new form are based on the new North American Industry Classification System, which has replaced the Standard Industrial Classification system.