Update: Changes to Tax Deadlines

Due to the severe economic impact many individuals and businesses are experiencing as a result of the coronavirus pandemic, the filing and payment deadline for 2019 income taxes has been extended to July 15, 2020. Interest and penalties will be applied after this date. The automatic deadline extension applies to individuals and businesses, including corporations and trusts. This deadline extension also applies to estimated 2020 tax payments due on April 15. 

There are aspects of small business taxes that prompt many questions. One of the biggest is, “When are small business taxes due?”

Depending on how your company is structured, business tax deadlines are typically either March 15 or April 15, though this year, filing deadlines have been extended to July 15. 

Other variables you should be aware of when filing your business tax forms, include: 

  • How business structure impacts small businesses’ tax deadlines
  • What you should know about estimated taxes
  • How to file a business tax extension
  • Federal business tax extension deadlines 
  • What happens if you miss a tax deadline

When Are Business Taxes Due?

Update: Please note that the dates detailed below are standard tax deadlines. Extensions have been put in place in response to the coronavirus pandemic. Refer to the IRS website for the most up-to-date information.

When business taxes are due varies according to how your business organization is structured. While April 15 is a date the majority of Americans need to remember, the due date for small business taxes may be different. Let’s see how your business structure will impact the deadline to file small business taxes.

Here’s when each of the most common business organizations are required to file:

Sole Proprietorships and Single-Member LLCs

The business tax filing deadline for business owners who function as sole proprietors or single-member LLCs is April 15. Documents needed for filing include Form 1040, including Schedule C.

Partnerships and Multi-Member LLCs

What is the due date for business taxes if your company is a partnership or multi-member LLC? The IRS notes that businesses structured as one of these two organizations are required to file Form 1065 by the 15th day of the 3rd month after the end of the company’s tax year, or March 15. However, because March 15 falls on a Sunday in 2020, these companies will have until Monday, March 16 to file. A Schedule K-1 tax form is also required from each owner as part of their personal tax returns. 

S Corporations

Similarly, the due date for business tax filings for S corporations that follow a calendar year schedule is March 16. To file, S corporations will need to submit Form 1120S as well as Schedule K-1 for each shareholder.

C Corporations

The deadline for business taxes to be filed by companies structured as C corporations is April 15. The exception is a corporation with a fiscal year ending June 30. Corporations with this fiscal structure will be required to file by Sept. 15. Form 1120 is among the documents that need to be submitted to the IRS by the filing deadline.

A woman is using a calculator to calculate her tax payment so she can file her taxes by the business tax deadline.

Estimated Tax Payments

As defined by the IRS, “estimated tax is the method used to pay tax on income that is not subject to withholding.” This income includes self-employment, dividends, rental, interest and capital gains. Estimated taxes are paid through quarterly installments during the year.

Who Needs to Pay Estimated Tax

Sole proprietors as well as partners and S corporation shareholders who expect to owe taxes of $1,000 or more at the time of their return are required to pay estimated taxes. The requirements for corporations are slightly different as they need to make estimated tax payments if they believe they’ll owe $500 or more in taxes. 

In addition, if your tax was more than zero in the prior year, you might have to pay estimated tax for the current year. For more details on who must pay estimated tax, consult the worksheet found in Form 1040-ES, Estimated Tax for Individuals (PDF), or Form 1120-W, Estimated Tax for Corporations (PDF). 

How To Calculate Your Estimated Business Tax

To figure out how much you should pay in estimated tax, you need to first determine your expected adjusted gross income, taxable income, taxes, deductions and credits for the year.

Using those elements from the previous year’s income as a guide, use the worksheet found in Form 1040-ES to project your estimated tax. Your goal using this worksheet is to get an idea of the amount of income you expect to earn for the year.

Each quarter will present another opportunity to more accurately assess your income, meaning you will continue to use Form 1040-ES throughout the year. While it might be challenging, estimating your income as precisely as possible will allow you to avoid penalties and overpayment.

Corporations differ from other business organizations here as well, as they use Form 1120-W to figure estimated tax.

Estimated Business Tax Due Dates 

Estimated business tax due dates vary depending if your business is a sole proprietorship or a corporation. It’s important to note that partnerships don’t pay estimated taxes because they don’t withhold taxes when paying out distributions to their partners. However, partners as individuals might need to pay estimated taxes.

The estimated business taxes due date for individuals and sole proprietors is as follows:

  • April 15, 2020
  • June 15, 2020
  • Sept. 15, 2020
  • Jan. 15, 2021

In contrast, the estimated business taxes due date for corporations is:

  • April 15, 2020
  • June 15, 2020
  • Sept. 15, 2020
  • Dec. 15, 2020

Paying Your Estimated Business Taxes

The IRS allows payments to be remitted online, by phone or by mail. For more details, see the section of Form 1040-ES titled “How to Pay Estimated Tax,” as well as Publication 505, Tax Withholding and Estimated Tax.

The Electronic Federal Tax Payment System (EFTPS) is arguably the easiest and most convenient way for businesses to pay federal taxes, allowing organizations to pay federal tax deposits (FTDs), installment agreement and estimated tax payments.

Installments can be made in weekly, bi-weekly or monthly increments, as long as the total tax bill is satisfied at the end of the quarter. Much like a digital bank statement, the EFTPS also allows you to view historical payments to review what you’ve already paid and how much remains.

If your business is structured as a corporation, you are required to use the Electronic Federal Tax Payment System. To learn more about this requirement, see IRS Publication 542, Corporations.

An image of Benjamin Franklin and a stop watch are a reminder of the business tax filing deadline.

Filing a Business Tax Extension

Running your own business is quite involved, and sometimes tasks get put on the backburner even when they’re important. If, for whatever reason, you’re unable to meet the deadlines set out for your specific business organization, you can file for an extension by the regular tax filing deadline for your entity type. Corporations and partnerships will need to file Form 7004 to request an extension, while sole proprietors will need to file Form 4868.

A business tax extension allows you to file your tax returns 6 months later, though if you expect to owe taxes, you’re still required to pay this amount by the regular business tax filing deadline. Penalties for late payments are calculated at 0.5% of the unpaid tax balance per month, with 25% being the maximum.

Federal Business Tax Extension Deadlines

Federal business tax extension deadlines also vary by company structure. Let’s take a look at the business tax filing deadline for extensions by entity type. 

Sole Proprietorships and Single-Member LLCs

Sole proprietorships and single-member LLC tax extension filings give business owners until Oct. 15 to submit their taxes.

Partnerships and Multi-Member LLCs

The federal business tax extension deadline for partnerships and multiple-member LLCs to file is Sept. 15.

S Corporations

S corporations tax extension filings give business owners until Sept. 15 to submit their taxes.

C Corporations

In contrast, the federal business tax extension deadline for C corporations is Oct. 15.

What Happens If You Miss a Business Tax Deadline?

While it’s not the end of the world, missing a tax deadline can add additional financial burden to your business. If you do miss a deadline, the IRS recommends that you file and pay as soon as possible. Often, a moderate financial penalty is assessed to your tax account; although as long as the taxes are satisfied in a timely manner, you can avoid additional fees. 

Payments can be made to the IRS by mail, as well as online through IRS Direct Pay, which is the fastest method to settle your tax balance. 

Payroll Tax Deferrals

The Coronavirus Aid, Relief and Economic Security Act, the CARES Act, recently signed into law allows for business owners of any size to postpone their Social Security contributions for workers (6.2% of wages up to $137,700 in 2020) due between March 27, 2020, and Dec. 31, 2021. 

How does it work? The accrued amounts will be divided into 2 lump-sum payments. By Dec. 31, 2021, you’ll need to make a payment equal to half of the amount. The outstanding payment will be due by Dec. 31, 2022. Self-employed individuals can also defer half of their 2020 Social Security taxes for estimated tax purposes. 

A business that obtains a Paycheck Protection Program loan that is forgiven will not be eligible to defer their payroll tax liability.

Conclusion

Small business taxes require careful review and attention to detail. While the tax code is full of cumbersome language, the basics of business taxes are straightforward — especially when it comes to business tax deadlines. The best way for you to stay in the good graces of the IRS is to submit your required tax forms and payments by your business tax filing deadline. 

If you’re concerned that you may miss a deadline or you’re not sure your business will have everything needed to file, you can file for a federal business tax extension. Talk with your CPA to find out your small business tax rates and secure all of the documents, details and payment specifics you’ll need.

 

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