What to Do If Your Business Return Still Isn't Ready
If you own a business, and you pay your taxes based on the calendar year, then your deadline for filing your business tax return is March 15. That date is just around the corner, and if you’re feeling the time constraint pressing in on you, then you need to take proper steps to avoid major fees and penalties from the IRS. But if your tax return simply isn’t ready, and won’t be ready before the deadline, there is another option available to you. Here’s how you can request an extension for your business tax return.
A Note on Due Dates
First, let’s talk about due dates for tax returns to determine precisely when your tax return is due—because it’s not the same for every business. If your business is organized as a partnership, then your taxes are due on the 15th day of the 3rd month after your tax year ends. So, if your business is a partnership and a calendar year taxpayer, then that makes your due date March 15th.
If your business is an S corporation, your tax deadline is also the 15th day of the 3rd month after the end of your tax year (or March 15th for those businesses with a year end of December 31st).
If your business is organized as a C corporation, however, your tax deadline isn’t until the 15th day of the 4th month after your tax year ends. For calendar year taxpayers, that means your deadline isn’t until April 15th (the same as the deadline for personal tax returns). So, you have a little bit more time.
Now, if your company isn’t a calendar year taxpayer, and your year end is a date other than December 31st, you will have to calculate your tax deadline separately and work with your accountant to ensure that you meet it.
How to Request an Extension
Requesting an extension to file your business tax return is actually quite simple. It only requires submitting a single form—Form 7004: Application for Automatic Extension of Time to File. This will extend your due date to file your tax return by 6 months (September 15th for S corporations and partnerships that pay taxes by calendar year, and October 15th for C corporations that pay by calendar year).
Making an Estimated Payment
It’s important to note that extending your due date for filing your return does not extend your due date for paying your taxes. When you file an extension request, you should also submit an estimated payment on your taxes to avoid late payment fees, interest, and other penalties. Even if you don’t have all of your documents ready to file, one of our CPAs can help you to make a decent calculation of what you will owe on your taxes so that you can submit a payment when requesting your extension.
Failure to send in a payment with your extension request could also result in your extension being invalidated, which could then lead to additional fees and penalties.
The guidelines for extending your state tax return varies by state, so if your business earns income in multiple states, it’s important to find the proper information for each state in which you’re filing. In the majority of instances, your federal extension request will also extend your state return. However, if you owe state taxes, that extension may not be approved, so make sure you are careful with how you handle your state tax extension requests.
Consequences of Not Filing or Extending
If you fail to file your business tax return by the appropriate due date, and you do not file an extension either, you will face a variety of different fees and penalties, such as:
- Late filing fees
- Late payment fees (if you owe)
- Interest on any amount you owe
- And more
Depending on how your business is organized, these fees can be charged directly to the business or to each shareholder in the company. Additionally, it’s important to note that interest on your unpaid taxes will continue to be added to what you owe, up to 25% of the unpaid tax; this is why it is so important to submit your estimated payment when filing an extension.
If your business return isn’t ready to be filed yet, contact one of our experienced business tax preparers. We’ll help you file an extension, make an estimated payment, and get your full return prepared by the extension deadline later this year.
Camputaro and Associates
Certified Public Accounting Firm
136 N. Orchard Street, Suite 8
Ormond Beach, FL 32174