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How does ClearBooks prepare Form 1120 from the ledger?
"Prefill from Transactions" reads the full year of the ledger, including posted journal entries, so year-end adjusting entries are reflected. Accounts are mapped onto the lines of Form 1120 by account type and number range:
- Gross receipts and cost of goods sold (lines 1a and 2) come from your revenue and cost of goods accounts.
- Deductions are assigned to their own lines, including salaries and wages, rent, interest, depreciation and advertising, plus officer compensation, payroll taxes, pension and employee benefits when payroll runs in ClearBooks, instead of being lumped into "Other deductions." Contractor payments are kept off the wages line and flagged for review.
- Meals are deducted at 50%, and the nondeductible half is noted.
- Line 26, Other deductions, is itemized by account for the required attached statement.
- Net operating loss carryforwards from prior years are applied, limited to 80% of taxable income, before the 21% corporate rate.
The return includes Schedules C, J, K, L, M-1 and M-2. Schedule K follows the question wording of the tax year you select, because that schedule changes between revisions.
Each run replaces the amounts derived from the books, so re-running after you reclassify a transaction does not double count.
How does California Form 100 work?
California Form 100 starts from the federal return. Line 1 comes from the saved Form 1120 for the same year, or from a Schedule F computed from the books if you have not prepared the federal return yet, so preparing the 1120 first gives a better California draft. ClearBooks then applies California's own rules:
- The $800 minimum franchise tax is a floor. A corporation with a loss still owes $800, and credits cannot reduce the tax below it.
- First-year exemption. A corporation in its first taxable year is not subject to the minimum.
- Estimated payments follow California's 30% / 40% / 0% / 30% schedule, not four equal installments.
- Depreciation differences. California has no bonus depreciation and caps Section 179, so the federal and California depreciation difference is computed from the fixed asset register.
- The 2024 to 2026 NOL suspension is applied for corporations it covers, with the exemption for taxable income under $1,000,000.
The general 8.84% rate and the 10.84% rate for banks and financial corporations are supported.
Does it fill the official IRS and FTB forms?
Yes. For the 2024 and 2025 tax years, ClearBooks fills the official Form 1120 PDF from the IRS and the official Form 100 PDF from the Franchise Tax Board, mapped field by field to the printed line numbers.
From the Filing Center you can download a filing packet for either return: a cover sheet with the due date, extended due date, amount due and the mailing address, a signing checklist, the filled official form, and supporting statements such as the line 26 other-deductions statement and the officer compensation statement. The cover sheet also warns when something must be attached that ClearBooks does not generate.
What do you or your CPA still have to do?
ClearBooks prepares a draft. A person still has to review it, finish it and file it:
| Item | Status in ClearBooks |
|---|---|
| Income, cost of goods sold and deduction lines | Prefilled from the ledger |
| Interest, dividends, rents and royalties (lines 4 to 7) | Not separated; other income lands on line 10 for you to split |
| Form 4562 (depreciation) | Not generated; flagged when line 20 has a balance |
| Schedule G and Form 1125-E | Not generated; flagged when required |
| FTB 3885 depreciation detail and Schedule R apportionment worksheet | Not generated; the apportionment percentage is entered |
| Signature | Required; the packet's checklist covers who may sign |
| Filing | Done by you or your preparer, by mail or through tax software |
ClearBooks does not e-file. It also prepares only Form 1120 and California Form 100: S corporation (1120-S and 100S), partnership (1065) and LLC (Form 568) returns are not supported.
Tracking deadlines in the Filing Center
The Filing Center lists the year's obligations with due dates: Form 1120, Form 100, the California $800 payment and the four Form 100-ES installments, the Delaware annual franchise tax report, the California Statement of Information, Forms 1099-NEC, and, if you run payroll in ClearBooks, Forms 941, 940, W-2 and W-3 and the California, Texas and Arizona payroll returns. For each one you record a status (draft, filed, accepted, paid or not required) and how it was filed.
Sales tax: nexus monitoring and rate lookup
The sales tax module tracks year-to-date invoiced sales by customer state and compares them with each state's economic nexus threshold, so you can see when a state is approaching or has crossed the threshold. You can record your state registrations with filing frequency and next due date.
Rate lookup is intentionally narrow. The rate table ships with state base rates only; county, city and special district rates are zero unless you add your own jurisdiction rows. ClearBooks does not file or remit sales tax. If you sell taxable goods in many local jurisdictions, use a dedicated sales tax service for rates and filing.
Frequently asked questions
Can ClearBooks file my corporate tax return?
No. ClearBooks drafts Form 1120 and California Form 100 from your books and fills the official PDF forms, but it does not e-file. You or your CPA review, sign and file the return by mail or through tax preparation software.
Which tax forms does ClearBooks prepare?
Federal Form 1120 for C corporations, with Schedules C, J, K, L, M-1 and M-2, and California Form 100. It does not prepare Forms 1120-S, 1065, 100S or 568, or attachments such as Form 4562 and Schedule G.
Does the Form 1120 draft include journal entries?
Yes. The prefill reads the whole year of the ledger, including posted journal entries, so adjusting entries such as depreciation and accruals are reflected in the return.
How does ClearBooks handle California's $800 minimum franchise tax?
It treats $800 as a floor: a corporation with a loss still owes $800, and credits cannot reduce the tax below it. A corporation in its first taxable year is exempt from the minimum.
Does ClearBooks calculate local sales tax rates?
Only state base rates are included. County, city and special district rates must be added as your own jurisdiction rows. The sales tax module's main job is monitoring economic nexus thresholds by state; it does not file or remit sales tax.