Well, another tax filing season has come and gone – unless you have had to file an extension. Just like individuals filing personal tax returns, businesses can file for extensions if they need time to get things together. An extension can be a lifesaver for a company falling behind on tax compliance.
The Gurian CPA firm in Dallas, TX says that it is fairly common for businesses to need extensions. Business taxes are quite a bit more complicated than personal taxes, and sometimes businesses do not realize just how complicated they are until a few weeks before the filing deadline. Gurian CPA says that getting taxes done on time is one of the best reasons to use the CPA.
Tax Deadlines for Businesses
A business will file for an extension if it becomes clear that the normal tax deadline will be missed. However, note that deadlines are different depending on the type of business you operate. If you run a sole proprietorship or single-member LLC, your business tax return is part of your personal tax return. You file the appropriate schedules along with your regular 1040 form no later than April 15.
S Corporations must file their taxes no later than March 15. Technically, the law says no later than the 15th day of the third month following the end of the fiscal year. But all S corporations run their fiscal year concurrent with the calendar year.
Partnerships and C corporations have a deadline of the 15th day of the fourth month following the end of the fiscal year. So a company with a fiscal year ending December 31 would have to file its tax return by April 15.
Filing for an Extension
Regardless of the kind of company you are operating, filing for an extension must be done on or before the regular filing deadline. Waiting until after the regular deadline could result in tax penalties even with the application being approved. Businesses can file for an extension online, through their tax preparers or CPAs, or by completing and mailing in the appropriate paper form.
Note that an extension only delays the due date of the required paperwork by six months. If you operate as a sole proprietor and filed for an extension, you would have until October 15 to submit your completed tax return. Note that a filing extension does not delay payment of your tax bill. You are still required to pay what you think you owe, including your first estimated tax payment, by April 15.
Here are a few additional things you should know:
- If you pay what you think you owe but still underpay, there will likely be penalties assessed. Make sure you estimate your taxes as accurately as possible to avoid such penalties.
- You can only apply for and receive one extension per calendar year. That means you absolutely must complete your tax return by the second deadline or face IRS action.
- Extension dates change every year according to regular filing dates. Let’s say April 15 falls on a Saturday. Sole proprietors then have until Monday, April 17 to submit their tax returns or an extension application.
This is the time of year when many business owners realize they are in over their heads where taxes are concerned. It’s also a big time of year for CPAs looking to add new clients. If you are a business owner and taxes are a constant struggle for you, maybe it’s time to consider getting help. A CPA is more than a bookkeeper; he or she is an accountant with special knowledge and skills relating to taxes.