With the each day calls for of proudly owning a small enterprise, itâs not stunning that earnings tax season can sneak up on even essentially the most organized small enterprise proprietor. In these instances, itâs not unusual for enterprise homeowners to want extra time to file their taxes. This will be very true for new firms submitting taxes for the primary time.
For a small enterprise submitting taxes that will want extra time and could also be questioning, âCan I file an extension for my enterprise taxes?â Fortunately, the reply is sure. The Internal Revenue Service (IRS) makes it simple for small enterprise homeowners to ask for an extension to file their earnings taxes.
Because of the COVID-19 pandemic, the IRS prolonged the deadline for submitting earnings taxes for 2019 till July 15, 2020. That left many small enterprise homeowners asking, âCan you file an extension for 2020 enterprise taxes?â In addition, the deadline for 2020 earnings taxes to be filed in 2021 was prolonged till May 17, 2021. As a consequence, many small enterprise homeowners at the moment are asking, âWill the 2021 tax deadline be prolonged once more?â
For residents of Illinois, Kentucky, and Tennessee â all of which have been devastated by tornados throughout 2021 â the reply is sure. Residents in these states could have till May 16, 2022, to file their earnings taxes. For the remainder of the nation, the deadline for submitting 2021 taxes was April 18. Keep in thoughts that the conventional submitting deadline is April 15 however was moved to April 18 for 2022 as a result of April 15 was Good Friday.
The April 15 submitting deadline can also be the final day when you can also make a contribution to one of many following for the previous tax 12 months:
- Traditional IRA
- Roth IRA
- SEP â IRA
- Health Savings Account
- Solo 401(okay)
So so far as the query of is there an extension to file enterprise taxes throughout or for the tax 12 months 2020, the deadlines to file are lengthy gone. There isn’t any additional enterprise tax extension deadline for the tax 12 months 2020.
Not solely was April 18 the deadline to request a small enterprise tax extension, however estimated first-quarter taxes for 2022 have been additionally due by April 18. Should these estimated tax quantities not be paid or fall considerably brief of what’s required, the (IRS) can revoke the extension. This could lead on to having to pay penalties and curiosity on high of taxes owed.
But are you able to get an extension on enterprise taxes going ahead? Definitely. In reality, the IRS makes it pretty simple to accomplish that. All small enterprise homeowners have to do is observe just a few easy guidelines.
How to File for a Tax Extension
Tax extensions for businesses permit small enterprise homeowners extra time to collect their paperwork and file the right kinds. Tax extensions will be filed freed from cost.
Sole Proprietors can request an extension by submitting IRS Form 4868. This is the shape thatâs filed when requesting a private tax extension. Filing this way appropriately and on time can routinely give sole proprietors a six-month extension. LLCs with just one member additionally file for an extension utilizing Form 4868.
This is as a result of sole proprietors and single-member LLCs donât file separate enterprise tax returns. Rather, they report enterprise earnings or losses on Schedule C (Profit and Loss from Business), which is filed together with Form 1040.
Corporate tax extensions for firms and partnerships will be requested by submitting Form 7004. Estimated taxes owed should even be filed with the shape. Forms which can be listed in Part I of Form 7004 will routinely obtain a five-month extension. Forms listed in Part II of Form 7004 will obtain a six-month extension. Small enterprise homeowners donât even want to clarify why extra time is required to file their taxes.
Form 7004 will not be troublesome to full and requires just a few primary steps:
- Business identify, tax identification, and deal with have to be stuffed in on the high of the shape.
- In Part I, select the right type code for the kind of tax return filed by the enterprise. For instance, a company â or C Corp â information Form 1120. A partnership, in the meantime, information Form 1065.
- In Part II, the field on line two have to be checked if the request for extension is on the behalf of a international company that doesnât have a bodily office within the United States. The field on line three have to be checked if the submitting enterprise is the mum or dad firm of a bunch of firms that file a consolidated earnings tax return. The field on line 4 in Part II have to be checked if a enterprise qualifies for an prolonged deadline, which might make June 15 the brand new deadline for submitting. The following varieties of firms qualify for this prolonged deadline:
- Partnerships and firms that preserve their books and data exterior of the United States;
- Foreign firms which have a bodily office within the United States, and
- Domestic firms whose major sources of earnings are throughout the United States and its territories
- On Part II, line 5, companies should denote the calendar 12 months or tax 12 months for which an extension is being requested.
- On Part II, strains six via eight, companies should enter their tax legal responsibility and any funds theyâve already made towards that legal responsibility plus any credit they intend to take. Lastly, companies additionally point out the online tax due that they intend to pay with their extension request.
How to Submit Extension Request Forms
There are a lot of methods for small enterprise homeowners to file extension requests. Of course, estimated quarterly taxes aren’t topic to extensions and plenty of small enterprise homeowners benefit from the comfort of submitting and paying taxes on-line.
- The Electronic Federal Tax Payments System (EFTPS) permits small enterprise taxpayers to schedule direct debits of tax funds from their enterprise checking account. Businesses should enroll on-line to use EFTPS or request an enrollment type by calling EFTPS Customer Service at 800-555-4477. The strategy of initially enrolling in EFTPS takes 5 to seven enterprise days. As a consequence, itâs not perfect for a enterprise that wants to make a last-minute tax fee.
- Small companies may file electronically (e-file) through the use of tax software or via a tax professional. Businesses that file Form 7004 electronically could give you the chance to pay their taxes via an digital funds withdrawal. To accomplish that, they want to present their enterprise checking account quantity and the routing variety of their financial institution. In addition, they want to signal Form 8788-A, IRS e-file Electronic Funds Withdrawal Authorization for Form 7007.
- Another possibility for tax fee is to file a paper Form 7004 to the IRS and ship a verify for taxes owed together with it. Since completely different states ship their tax kinds to completely different addresses, enterprise homeowners ought to seek the advice of Instructions for Form 7004 supplied by the IRS to see the place they need to ship their kinds and checks. Itâs advisable to ship any kinds and checks to the IRS through Certified Mail so as to show it was by the unique submitting deadline.
Deadlines for Quarterly Taxes
Business homeowners who earn greater than $1,000 per 12 months are required to pay quarterly estimated earnings taxes. This contains sole proprietors, unbiased contractors, and anybody who’s self-employed. Anyone who’s a full-time worker drawing an annual wage additionally should pay estimated taxes every quarter in the event that they carry out any work on the aspect wherein the earnings complete greater than $1,000 in a given 12 months.
Form 1040-ES have to be submitted with quarterly tax funds. This type is used to estimate the earnings tax {that a} enterprise expects to owe on the finish of the 12 months.
The deadlines for quarterly tax funds are as follows:
First quarter: April 15
Second quarter: June 15
Third quarter: September 15
Fourth quarter: January 15 of the next 12 months.
For quarterly company tax funds, companies ought to use Form 1120-W in the event that they anticipate to owe greater than $500 for the 12 months.
State Tax Extensions
Should their state have a state earnings tax, small enterprise homeowners in want of an earnings tax submitting extension may even want to file an extension for a state earnings tax. Many states will grant an automated extension via a system comparable to the way wherein the federal authorities approves extensions. The course of via which small enterprise homeowners can file for a state tax extension will be discovered on the person state web sites.
Filing Business Taxes
Once an extension has been granted, the method of submitting enterprise taxes stays the identical as it will in the event that they have been being filed on schedule. Different kinds are required relying on the construction of a small enterprise, be it a sole proprietorship, partnership, LLC, or company.
1. Revenue and Expenses
The first step in submitting enterprise taxes is to arrange the income and expense data of the enterprise. These data embrace invoices, receipts, canceled checks, deposit slips, bank card statements, paid payments, and some other paperwork that assist calculate the earnings and bills of an organization.
Since most small companies use skilled accounting software program akin to Quicken or QuickBooks, the method of organizing earnings and bills is extra streamlined than it used to be. Expenses will be inputted as they’re incurred, and income added because it arrives. This data can then be exported straight into tax preparation software program.
2. Business Structure
The IRS requires completely different kinds to be filed with the tax return of a enterprise relying on its enterprise construction.These are outlined under. If any of the submitting dates listed fall on a weekend or a vacation, keep in mind that the deadline strikes to the subsequent enterprise day.
Sole Proprietorship. For the sort of enterprise, enterprise earnings and bills are reported on Schedule C (Profit and Loss from Business) which is hooked up to the non-public tax return (Form 1040) of the enterprise proprietor. The regular submitting deadline for a sole proprietorship is April 15.
Limited Liability Corporation (LLC). An LLC with one member would go via its earnings and losses on Schedule C and file that on the non-public tax return of that member. Should an LLC have two members, it’s then labeled as a partnership when it comes to federal earnings tax. An exception can be if an LLC with two members decides it will fairly be labeled as a company. In such a case, submitting Form 8832 would permit it to have the identical consideration as a company for tax functions. LLCs usually are required to file by April 15.
Corporation. Corporations â or C Corps — are required to file a company tax return utilizing Form 1120. Corporations whose fiscal 12 months ends on December 31 are usually required to file by April 15.
S Corporation. This type of enterprise yearly provides its shareholders a Schedule Okay-1, which lists every shareholderâs a part of the earnings and deductions of the enterprise for the 12 months. In doing so, S Corporations are thought of extensions of their shareholders for federal earnings tax functions. S Corporations additionally use Form 1120 to file a tax return, which is usually due by March 15.
Partnerships. Like S Corporations, partnerships present an annual Schedule Okay-1 to all of their companions that spells out every partnerâs share of the earnings and bills of the enterprise. The partnership additionally has to file a Form 1065 with the IRS, which is an informational tax return. Partnerships are usually required to file by March 15.