When Are My Taxes Due? Should I File An Extension?

Most business owners choose to work with an accountant to file their taxes, even if they take care of their own bookkeeping throughout the year, which is great (as long as you are working with the right accountant for your business!

However – you are still responsible for all of the information that is reported on your tax returns and making sure that you are meeting the filing deadlines.  Please don’t just assume your accountant is taking care of everything for you, or let them file something that you don’t understand.

You can’t be a Financially Empowered CEO without understanding some basics of how taxes work, so I am going to break it down for you here.  The information below isn’t intended to be a guide to show you how to file your own tax returns, but it’s meant to explain to you what you need to know as far as what needs to be filed and when – since you, as the business owner, are the one ultimately responsible for making sure this is done timely & correctly.  

It’s also important to understand HOW your taxes are paid when you have a business because it’s different than how they are paid when you have a job.  The answer to this depends on how your business is set up. I’m going to go through each type of business and show you how it works, and what your deadlines are. Grab your calendar and mark down these important deadlines make sure that your taxes (or an extension) is filed by the deadline.

And, of course, this isn’t financial or tax advice, it’s for information purposes only.  You need to talk with your own financial team about your specific deadlines and how to apply this information to your own business.  

Your personal tax return is always going to be due April 15th.  Sometimes April 15th falls on a weekend or holiday which can push out the deadline by a few days, but filing them by April 15th will ensure that you are on time every year. 

If you are married, then you will usually file a joint tax return with your spouse (in some cases, this isn’t best, but that’s rare).   So your personal tax return will be a report of your income, your spouse’s income, any investment income you generate from investment accounts, rental properties, etc. All of this income is tallied up, your deductions are subtracted and then your tax rate is applied, and then you will end up with either a refund or a payment that’s due.  That’s the basics of tax returns. 

When you add in a business, that’s when things get more complicated  🙂

If you are a Sole Proprietor or an LLC, then you complete a report called a Schedule C as part of your personal tax return.  You pay self-employment taxes on the business profit in addition to your regular federal and state (if applicable) taxes. So, your tax due date is still April 15th, for your business and personal tax returns.  

The LLC is just a legal thing, there’s no impact on your tax returns.  

If you have a partnership, your taxes are due March 15th (although, with the weekend the deadline this year is actually March 16th).  You will need to file a separate tax return called a Form 1065 that reports all of the details of the income and expenses of the partnership. It then generates a Form K-1, which shows the details of what needs to be reported on your tax return.  Each partner will need to receive their K-1 and report this information on their personal tax return. This means that the business tax returns need to be completed & filed before you can complete your personal tax return.     

If you are a C-Corp, then your taxes are due April 15th.  The business will file a separate tax return called an 1120 that reports all of the details of the income and expenses of the corporation.  For any owners, there are also W2s and Dividend 1099s that may need to be reported, it depends on how the business and it’s ownership is structured.  

If you have elected to be taxed as an S-Corp, then your taxes are due March 15th (March 16th this year).  (This is just a tax election, you are still an LLC or C-Corp for your legal structure)  The business will file a separate tax return called a Form 1120S that reports all of the details of the income and expenses of the S-Corporation. It then generates a Form K-1, which shows the details of what needs to be reported on your tax return.  Each shareholder will need to receive their K-1 and report this information on their personal tax return. This means that the business tax returns need to be completed & filed before you can complete your personal tax return. As an owner of an S-Corporation, you should also be taking a payroll check to be in compliance with the IRS for paying reasonable wages.  So, you will also have a W2 generated by your company as well.   

Should I file an extension?

If you need one, YES.  Easy answer. It’s free to file one, it can be done online and there’s no penalty.  If you don’t have your records together and it’s tax season, it would be better to take the time to put things together well and be sure they are correct than rush through it to get a return filed.  If you work with a traditional accounting firm who is stressed and overloaded during tax season then you will also probably get better service and a lower tax bill if you work on your taxes with them after tax season crunch is over. 

But here’s the thing about extensions – they are only an extension of the paperwork, not of the time that you have to pay your taxes.  Your actual tax bill is still due on the date above. If you are planning to pay your taxes (instead of setting up a payment plan), then you will want to estimate how much you will owe and pay that along with the extension before the due date of your return.  If you don’t have money set aside for your tax bill – this article will be helpful for you to read to see what we recommend in this situation. {Spoiler alert – panicking is NOT one of our recommended strategies 🙂 }   

Once you file the extension, it gives you 6 more months, until either September 15th (for Partnerships or S-Corps) or October 15th (for your personal return, Sole Props, LLC and C Corps) to get everything pulled together and filed.  

The worst thing you can do during tax season is freak out, get stressed out, run-off and work with an accountant who isn’t a good fit just to get something filed.  It’s not worth it, and mistakes will likely be made that will cause you to pay more in taxes than you likely owe. File the extension and then circle back to it and work with someone you can develop a relationship with who can grow with your business as your business grows.  

You can file your extension online, it’s super easy.  Read more here:

https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return

TL:DR?  Here’s a cheat sheet for you! GO mark your calendar TODAY. 

Sole Prop + LLC

Filed on your personal return, on a Schedule C

April 15th

October 15th

Partnership

Filed on a separate return, called a 1065

March 15th

September 15th

C-Corp

Filed on a separate return, called an 1120

April 15th

October 15th

S-Corp

Filed on a separate return, called an 1120S

March 15th

September 15th

 

And, if you are ready to have financial support with your taxes, book a call to chat with us today!

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