Business owners often wait until the latest minute to file their taxes. While there's no penalty for doing so, it’s better to get it done early.
Early filers enjoy faster tax refunds. They also have a lower risk of facing penalties.
Usually, taxpayers are subject to a failure-to-file penalty of 5% every month for tax owed, up to a maximum of 25%. This can impact your bottom line and ability to allocate funds to vital business processes. Avoid penalties by filing your taxes before the due date.
Stable can help you by providing a permanent business address for all vital correspondence. We'll manage and store your company’s crucial business-related mail, ensuring you have all you need to file your taxes.
Understanding tax season is crucial to avoiding late or failure-to-file penalties.
Tax season fluctuates slightly from year to year, but typically starts a few weeks into the year (usually at the end of January) and runs until mid-April.
The official tax day is the 15th day of the fourth month—the Internal Revenue Service's (IRS's) tax deadline.
However, the IRS can push the deadline to the next business day if the due date falls on a weekend or legal holiday. For example, 2023's tax day was pushed to April 18 because April 15 fell on a Saturday, and the following Monday was Emancipation Day, a holiday in Washington D.C. that celebrates the abolition of slavery.
Your business's tax day may be pushed further if you file for a tax extension. Business entities can request an extension deadline if they're sure they can't meet the IRS's business tax deadlines. An extension can help you avoid a failure-to-file deadline, which can add up to 25% of owed tax.
If you file for an extension, you get an additional six months from the official tax day to file your taxes. This typically puts your extension deadline at October 15, after which your small business becomes subject to the failure-to-file deadline.
Business tax deadlines may vary depending on your entity's structure. Sole proprietorships have different deadlines from limited liability companies (LLCs), which have varying deadlines from corporations, and so on.
Here's an in-depth look at various entities' federal tax forms and deadlines:
The IRS tax return deadline for C corporations, also known as C-corp, is due on April 15, 2024.
Forms include the U.S Corporation Income Tax Return, known as Form 1120 (Note: This is the 2022 tax year form).
This document needs to be submitted to the IRS so that C corporations can understand their tax liability and find out how much they owe.
Form 1120 Instructions, the U.S. Corporation Income Tax Return
The IRS tax return deadline for S corporations, also known as S-corp, is March 15, 2024.
Forms include the U.S Income Tax Return for S Corporations, known as Form 1120S and Schedule K-1 (Note: These are the 2022 tax year forms).
These need to be submitted to the IRS so that S Corporations can understand their tax liability, find out how much business tax they owe, and report each party's share of the corporation's income, deductions, credits, etc.
What is a Schedule K-1 Tax Form?
About Schedule K-1 (Form 1120-S), Shareholder's Share of Income, Deductions, Credits, etc.
Form 1120-S Instructions, the U.S. Income Tax Return for an S Corporations
The IRS tax return deadline for partnerships and multi-member LLCs is due on March 15, 2024.
Forms include a U.S. Return of Partnership Income, known as Form 1065, and Schedule K-1 (Note: These are the 2022 tax year forms).
These need to be submitted to the IRS so that partnerships and multi-member LLCs can understand their tax liability, find out how much business tax they owe, and report the tax amount that is being passed to each partner.
About Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc.
About Form 1065, U.S. Return of Partnership Income
The IRS tax return deadline for sole proprietorships and single-member LLCs is due on April 15, 2024.
Forms include the U.S Individual Income Tax Return, known as Form 1040, and a Profit or Loss from Business, known as a Schedule C (Note: These are the 2022 & 2023 tax year forms, respectively).
These tax forms need to be submitted to the IRS so that sole proprietors and single-member LLCs can understand their tax liability, find out how much business tax they owe, and report income or losses.
About Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship)
About Form 1040, U.S. Individual Income Tax Return
You can change your business's tax classification by filing Form 8832. Consult with a tax advisor to determine your eligibility for the change and how to proceed.
Businesses and taxpayers in the U.S. are subject to a multitiered tax system, which requires them to pay taxes at the federal, state, and — in some cases — local levels.
The IRS collects federal taxes, but each state has a designated taxing authority responsible for state taxes.
These deadlines often correspond with the IRS's tax deadline — typically April 15. But this isn't always the case. Your state may require you to file your corporate tax returns earlier, or they could provide a more extensive filing period.
This makes it essential to understand your state's unique requirements. Click on your state for additional information.
The IRS also requires filers whose income isn't subject to automatic withholding to make quarterly estimated tax payments on April 15, June 15, September 15, and January 15.
Filers required to make estimated tax payments include independent contractors, small business owners, self-employed individuals, and people who receive royalties on their work.
As previously stated, tax filing deadlines aren't set in stone — the IRS can extend the deadline if it falls on a weekend or legal holiday. But these aren't the only circumstances.
The tax deadline can also be extended in a public crisis or natural disaster. For example, the IRS extended 2021's tax due date to May 17 because of the economic hardships brought on by the COVID-19 pandemic. Similarly, Texas residents were given a tax extension in 2021 when FEMA declared the winter storms in the state a natural disaster.
You can also file for an extension if you're sure you won't complete the process by April 15. To do so, submit your estimated tax payment and the relevant paperwork before the tax filing deadline.
You can send your extension request by mail, or electronically through an approved IRS Modernized e-File (MeF) Business Provider.
An extension doesn't extend your payment deadline — only your filing deadline. This means you must estimate your tax bill before the deadline and pay it.
Also, you only get a single extension. Ensure you file your business income tax before the six-month extension deadline lapses to prevent penalties.
There's no penalty for late filing if the IRS owes you a tax refund.
But, penalties can be significant if you owe taxes and delay filing. The IRS charges a 5% failure-to-file penalty per month (usually capped at 25%) on taxes filed after the due date unless there's a reasonable cause for the delay.
If you fail to file your taxes, the IRS may do so for you. This is referred to as a Substitute for Return (SFR). While it may sound convenient, you might receive a higher tax bill than anticipated.
The SFR is based on available documents like Form 1099 and Form W-2, which don't typically provide details on deductions, exemptions, or tax credits. Failure to contest or pay your tax bill can result in collection by the IRS through means like levies on your bank account.
The best way to mitigate penalties if you miss a deadline is to file and pay your taxes as soon as possible. The faster you file, the lower your penalties will be.
You can also mitigate penalties by demonstrating you acted in good faith and exercised prudence but could not meet the deadline because of reasonable causes. They could include natural disasters, system delays, and the inability to retrieve your records. If, after assessment, the IRS determines you had a reasonable cause for late filing, it may remove or reduce the penalties.
Filing your business taxes early allows you to claim and receive your refunds faster. It also reduces your risk of penalties and keeps you in good standing with the IRS and your state tax agency.
At Stable, we're committed to improving numerous aspects of your business, including tax filing. Stable's Reminders feature sends notifications directly to your inbox when federal tax filing dates are near. Forget about last-day rushes, missed deadlines, and penalties when you sign up for a Stable account.
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