Weather it is your first year of business or you are a veteran business owner, taxes can be one of the most intimidating part of any business.
Take a moment to see what deadline applies to your business so you can make sure you are ready to file on time!
Before we dive into deadlines, I want to make sure that as a business owner you understand your business entity type and how it impacts your tax returns.
Understanding the type of entity
When you set up your new business, you must decide the type of entity which determines how your business will be taxed and which income tax return your business needs to file.
The most common forms of business entities are sole proprietorship, partnership, C-corporations or S-corporations.
Sole proprietorship, partnership and S-corporations are “pass-through” or “flow-through” entities. This means that all business income, losses and expenses are passed through to the owner and you (the business owner) have to pay taxes on the profits at individual level. If the entity has multiple owners/partners, the profits get divided between the owners based on the percentage share of how much of the company each owner/partner owns.
C-corporation is recognized as a separate taxpayer entity i.e. it conducts business, realizes profit or loss, pays taxes and distributes profits to its shareholders. C-corporation creates double taxation as the profit is first taxed in the corporation when it is earned and then is taxed in the hands of shareholders when distributed via dividends or W-2.
What is my tax filing deadline?
The table shows tax filing deadlines for 2019 taxes using the calendar year as fiscal year i.e. your entity’s yearend is same as calendar year end – December 31, 2019
|Type of entity||Filing Due Date||Revised Due Date*||Deadline to file for extension|
|Sole proprietorship||April 15,2020||July 15,2020||July 15,2020|
|Partnership||March 16,2020||March 16,2020|
|C-Corporations||April 15,2020||July 15,2020||July 15,2020|
|S-corporations||March 16,2020||March 16,2020|
* Due to coronavirus pandemic, IRS has extended the tax deadline from April 15 to July 15 i.e. you now have ninety extra days to file and pay your taxes.
What is the deadline to pay my taxes?
Due to Covid-19, the payment deadlines for tax returns have been extended from April 15 to July 15, 2020. This relief applies to all individual returns and corporations. This relief is automatic and do not need filing or any additional forms.
If you are self-employed, taxes are paid during the year through estimated tax payments. Entities filing as sole proprietor, partnership, S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more and for Corporations, if the tax amount is $500 or more.
Due dates for these payments are:
Due to covid-19, many businesses are facing unseen challenges and need extra time to prepare for filing.
Use Form-7004 to request for extension.
Do note that filing for extension does not extend the time for payment of tax. If you are deciding to go this route, talk to your accountant to determine if that is the best option in you case.
July 15 is only a few days away! Prepare your books, documents and records and reach out to your accountant or tax expert to file the taxes. And if you don’t have anything ready or have any questions and need help, book a free consultation with an expert!
Please be advised that this information is intended to be used for informational purposes only and does not constitute tax, accounting, business or legal advice. For advice, consult your tax advisor, accountant, or attorney. HubOrgs assumes no liability for actions taken in reliance upon the information contained herein.