When are taxes due?
Business Tax Due Dates
Even though it is common knowledge that tax season comes around every year, it still seems to catch some people by surprise – and I don’t blame them. Business owners are busy with day-to-day operations, keeping their employees happy, paying their bills, and maintaining a healthy work-life balance. A good place to start the journey to a stress-free tax season is to become knowledgeable about when your tax returns are due, when your tax payments are due, and your options for extending your time to file. Let’s talk about it.
First, we must start by understanding what type of tax returns you must file. Is your business classified a sole proprietorship, S-Corp, C-Corp, Partnership? This will determine what type of return you must file, when you must file, and when you must pay. For more information on the different tax classifications, check out our blog post Business Structures & Tax Classifications.
Sole Proprietorship
If your business is classified as a sole proprietorship, you might be glad to find that the business revenues and expenses will be reported on Schedule C of your personal tax return, so there is no need to file a separate tax return for your business. This can save you time, and tax preparation fees.
Form 1040, your personal tax return, is due on April 15th. However, if you are not ready to file your return by this date, you can file Form 4868 to request an automatic 6-month extension to file your return. It’s important to note that by filing form 4868, you are only extending your time to file your return, not the time to pay for your tax liability. So, if you expect to have tax due with your return, you must make a payment along with your extension request, or you will be subject to late payment penalties.
Partnership
If your business is classified as a partnership, you will need to file Form 1065 by March 15th. Form 1065 is considered an “Informational Return” because there are no taxes due with this return. Any income or expense reported on Form 1065 will be passed through to the individual partners through a Form K-1, who will ultimately pay taxes on their share of the income on their personal tax return, Form 1040. An automatic 6-month extension can be requested by filing Form 7004 by March 15th.
S-Corp
In some cases, businesses will benefit from requesting the IRS to be treated as an S-Corp. This request can be made by filing Form 2553. If this applies to your business, your tax return Form 1120S will be due on March 15th. Like partnerships, any income or expense reported on Form 1120S will be passed through to the individual partners through a Form K-1, who will ultimately pay taxes on their share of the income on their personal tax return, Form 1040. An automatic 6-month extension can be requested by filing Form 7004 by March 15th.
Corporation
If your business is treated as a Corporation for tax purposes, you will need to file Form 1120 by April 15th. An automatic 6-month extension can be requested by filing Form 7004 by April 15th. However, since Corporations are liable for taxes on their income, requesting an extension will only extend your time to file a return, not your time to pay. So, if you expect to have tax due with your return, you must make a payment along with your extension request, or you will be subject to late payment penalties.
Quarterly Estimated Payments
Depending on your circumstances, your business may be liable for making estimated tax payments throughout the tax year. They are called “estimated” because you are expected to make payments based on what you expect your liability will be at the end of the year.
Individuals must make quarterly estimated payments if their expected tax liability for the year is $1,000 or more. For Corporations, quarterly estimated payments are required if their expected tax liability for the year is $500 or more. Estimated payments are due as follows:
Corporation:
1st installment: April 15th
2nd installment: June 15th
3rd installment: September 15th
4th installment: December 15th
Individual:
1st installment: April 15th
2nd installment: June 15th
3rd installment: September 15th
4th installment: January 15th*
*The 4th installment is not required if you will file your tax return by January 31st of the following year and pay the entire balance due with your return.
With a little bit of knowledge and preparation, tax season does not have to be stressful. For more tips on accounting and tax, visit our website and follow us on social media.