When Should You File Your Business Taxes?

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Staff Writer - Angela
May 22, 2018
When Should You File Your Business Taxes?

Running a business can be extremely complicated, requiring you to keep track of a great deal of information. In addition to making sure your customers are happy and your business is financially stable, you also have to be certain you’re paying your business taxes on time and in the correct amount.

Failing to pay your taxes on time can put your business in a very precarious situation, which is why it’s a good idea to learn about the different deadlines for business taxes so you can make sure you don’t run afoul of the IRS. Find out when business taxes are due and get some tips for keeping track of them so you can focus on making your company as successful as possible.

Have a Stable Accounting System

The reason it’s so important to pay your business taxes on time is because paying them late can result in a stiff penalty. Fortunately, you should easily be able to pay your business taxes when they are due by having a year-round accounting system.

You can build a calendar around your required business tax payments so you never miss a deadline, which will help you avoid late payment penalties.

When Are Business Taxes Due for Different Organizations?

One of the reasons people have trouble understanding when business taxes are due is that the due date can differ depending on the entity type in question. S-corporations, for example, have a different filing deadline than C-corporations, which means you need to be certain you’re filing your taxes by the correct deadline for your entity type.

If your business is an S-corporation or a partnership, you would need to file your taxes by March 15. Exempt organizations have the same filing deadline. To file your S-corporation taxes, you need Form 1120S. Partnerships file using Form 1065 and exempt organizations use Form 990. C-corporations have the same filing deadline as individuals, which is April 15. You should use Form 1120 to file your C-corporation taxes.

If you miss any of these deadlines, you can file for an extension, which will give you a little more time to get your taxes in order without suffering a penalty. If your business is a partnership or S-corporation and you request an extension, your final filing deadline will be Sept. 15. The final deadline for an extension for C-corporations is Oct. 15. Finally, exempt organizations that request an extension will need to make sure their taxes are filed by Aug. 15.

Generally, for pass-through business entities, taxes are due on the 15th day of the third month of the year. This date can change, however, depending on whether the 15th falls on a weekend or holiday. Traditional corporations, as well as individuals, will usually file their taxes on the 15th day of the fourth month of the year.

Do You Need an Extension?

Getting your business’s taxes in order can sometimes feel like an uphill battle, and even if you’re vigilant about keeping up with your taxes, you may find yourself approaching the deadline without having your filing ready to submit. Maybe the first few months of the year are extremely busy and you just don’t have time to work on your taxes, or maybe some of your business activities from the previous year resulted in complicated tax implications.

No matter the reason, if you think your taxes are going to be late, you should file for an extension so you or your accountant have the extra time you need to get your taxes in order and ready to file.

Filing for an extension can be beneficial, especially if you find yourself struggling to organize your taxes. If you’re at all concerned you won’t be able to meet the filing deadline, or if you’re worried rushing to complete your taxes will result in a serious mistake, then filing for an extension is the lifeline you’ve been looking for.

By filing for an extension, you’ll have the extra time you need to make sure your taxes are done properly. You can fully review your taxes to make sure you haven’t missed anything that might result in interest, and you can also avoid the penalty for filing late.

The length of your extension will depend on your entity type. Most entities, including S-corporations, C-corporations, and partnerships, can receive a six-month extension by filing Form 7004. Exempt organizations, however, only have access to a three-month extension, which they can receive by filing Form 8868.

You should be aware an extension only delays your filing date, not the date your payment is due. Before you file for an extension, make sure to get advice from a tax professional so you’re making your payment on time and in the proper amount.

Paying Quarterly Taxes

An important issue to understand is the IRS, as well as state tax agencies, expect everyone to pay some amount of taxes throughout the year. For example, W-2 employees will have a certain amount of money automatically withheld from their paycheck to cover these takes. This issue, however, is much trickier when it comes to businesses.

Profitable businesses, for instance, are required to pay estimated taxes on a quarterly basis in addition to their annual returns. People who are self-employed are also required to pay quarterly estimated taxes.

If your business is earning a profit, make sure you are submitting your quarterly tax payments on the 15th day of April, June, September, and January. While it’s possible to wait until the year’s end to pay all your taxes, you might need to pay penalties and interest, which can be expensive depending on how much your business has earned during the year.

Should the 15th of the month fall on a holiday or the weekend, make your payment on the next business day.

Factors to Keep in Mind

The best way to make sure you’re meeting your tax burden is to file by the deadlines outlined by the IRS. There are, however, several other issues you should keep in mind that can impact how you file your taxes and the amount you will need to pay.

Where Did You Do Business?

If your business solely operates in the United States, then filing your taxes is difficult already. If you do business or have shareholders in other countries, however, your taxes can become even more complicated, making this an issue that deserves closer attention.

For example, if more than 25% of your company’s shareholders are not United States residents or citizens, then you are required to file a Form 5472 for each foreign shareholder. Fulfilling this requirement is extremely important, as failing to do so can result in harsh penalties. Each qualifying shareholder you do not file Form 5472 for can cost you $10,000.

Before you submit your taxes, make sure you are accounting for foreign shareholders you can file the correct form in order to avoid these expensive penalties.

Did You Do Business for the Entire Year?

Another important issue to consider when filing your business taxes is if your business has been in operation for the entire year. Stopping and starting a business has important tax implications you should be aware of. Not taking this issue into account may cause you to make a major mistake on your filing.

If you started your business during the tax year, you will need to know the exact date your operations began. With this date, your tax consultant can help you determine which of your expenses can be deducted. For instance, you can’t deduct costs that were incurred before your business was started at one time, but you may be able to deduct them over a 15-year period.

Likewise, if you have ended your business, you need to keep a record of the precise date your operations ceased. You need information about each and every transaction that took place before your business was dissolved. Once your business has ended, the only assets you should have are the money and property that need to be given to your investors. You will also need to pay the final taxes for your business.

If your business was not in operation for the entire tax year, whether it’s because you stopped or started your company, you will need to file a short-year return. This return will cover the time period your business was in operation. Seasonal businesses will commonly use the short-year return.

Did You Change the Structure of Your Business?

When you’re trying to calculate your business taxes, you need to consider whether you’ve maintained the same business structure for the entire year. If, for instance, your business started the year as a limited liability company (LLC) and you later converted to a C-corporation, you should consult with a tax expert so you can be certain you are filing correctly.

After you’ve transitioned your LLC to a C-corporation, you will need to file a short-year tax return for the months your LLC was in operation. From the time your LLC stopped existing, you will have three and a half months to file this return. It’s possible you will also need to pay taxes on any debts of the LLC that were transferred to the new C-corporation.

If you don’t pay these taxes correctly, the partners of your C-corporation will be required to pay $195 per month. This is in addition to the partners’ normal income taxes.

Have You Received Any Notices?

Frequently, the IRS and state agencies will send out notices to alert businesses and individual about issues related to their taxes. When you receive these notices, you will have a deadline for responding, whether by mail or by phone.

If you have received any of these notices, be sure not to ignore them. Respond in as timely a manner as possible, and if you need assistance, you should consult a tax professional. The IRS also provides instructions for dealing with notices that have been sent for an audit or a correction to your taxes.

Get Help With Your Payroll

If you’d like to save time on your taxes, then a good strategy is outsourcing your business’s payroll. Handling payroll can be complicated and time-consuming, so outsourcing this task can make it much easier for you to file your business taxes on time.

There are a variety of reasons dealing with your business’s payroll is difficult. For instance, every employee can have a different payroll, including salaries, benefits, and required tax withholdings. Additionally, an employee’s information can change within a tax year if they get a raise or their family situation is altered.

Another complication related to payroll is state and federal income tax rates can change from year to year, and if your employees are spread across multiple states, you will need to keep track of the tax rates in multiple locations. Withholding local and city taxes may also be required.

Finally, you will have to deal with several different tax forms, and the more employees your business has, the more paperwork you’ll have to manage. Choosing to outsource your payroll means you won’t have to worry about balancing these different issues and can focus your energy on running your business.

Avoid Common Mistakes

You also need to make sure you’re avoiding common tax mistakes that can result in big penalties. For instance, many taxpayers misunderstand the difference between realized gains and recognized gains. A realized gain occurs when you sell an asset for more than what is purchased. On the other hand, a recognized gain is a gain that is taxable.

Many people also make mistakes when it comes to their marginal tax rate. This tax rate is what you pay on the next dollar you have earned, not the rate on your total income.

Help With Tax Debt

If you’ve failed to file your taxes properly and find yourself in debt with the IRS, you can get help by working with one of the tax relief companies we’ve reviewed below. Hiring one of these companies means being able to put your tax debt behind you so you can concentrate on the future of your business.

 

Need help with your Tax Debt Relief?
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Tax Tiger
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