David Adam
As a business owner, you need to be very careful of multiple aspects for operating your business successfully, including bookkeeping and accounting. Apart from bookkeeping and accounting, one thing one cannot overlook is tax-associated matters. Filing tax returns for the business is considered important work to run a business.
However, most business owners delay their filing tax returns due to several reasons, including the fact that they have to fulfill their other responsible related to business matters. So, in that case, a business tax extension can save you back. Generally, a business tax extension allows you to pay late tax returns without any expensive penalties. The best part about this is that you can have more time to review all tax-associated matters before filling them. It can assist in fixing errors in your tax return papers.
Keep scrolling through this article to find out what a business tax extension is and how it will benefit you in operating your business.
What is Business Tax tax extension?
A business tax extension gives you additional time to file your tax returns, which can be essential if you do not have all the important documents. However, a business tax extension does not allow you to have extra time to cover the taxes owed; as a business owner, you have to evaluate your tax due and pay it, or you can face expensive penalties.
How to I file a Business Tax Extension?
A business tax extension is the best way to avoid any expensive penalties for late tax returns. However, knowing how to file a business tax extension properly is better so you cannot face any difficulties during tax filing. Here are some guidelines you can follow while filling out a business tax extension for your company.
Submit Paperwork Previously Your Filing Deadline
The most crucial aspect of filling out a business tax extension is submitting the paperwork to the Internal Revenue Service before filling your tax returns deadline. However, you can deal with late penalties if you do not file the extension and cover your taxes on time.
The filing deadline for the tax returns is based on the business type. For example, the filing deadline for S corporations is the 15th of the third month after the tax year ends. For C corporations, it is the 15th day of the fourth month after the tax year ends. Partnership or LLC is considered as 15th March next tax year. Last but not least, Schedule C, Sole Proprietorship, is 15th April following the tax year.
Evaluated Your Due Tax Payments and Submit Payments with the Extension Form
You have to calculate your tax payments due and give the payments along with the extension form. Then you can apply to file a business tax extension mentioned below:
Sole proprietorship and Schedule C: A business owner with a sole proprietorship may request an extension for income taxes by filling out the IRS Form 4868. 4868. A single-member limited liability company on Schedule C allows file extension by filling out IRS Form 4868.
Other Companies: Corporations, LLCs, and other organizations utilize IRS Form 7004 to submit a request for a filing business tax extension.
File Your Federal Tax Extension Forms Through Mail or Electronically.
You can take out the print of a business tax extension form and mail them through the Modernize e-File Program. You can take help from an authorized provider. Also, searching for an authorized IRS e-file provider by location is the best way to file your business tax extension accurately.
Most of the bookkeeping platforms provide the service of tax filing, but it is better to explore other bookkeeping services with your preferred tax filing method.
You Receive Only One Extension
The Internal Revenue Service does not allow an extra extension except for the first extension. You may file a return after the extended due date; only expect to cover additional penalties. It would be best if you filed as fast as possible to eliminate extra penalties. The Internal Revenue Service considered that a late file penalty is more than a late pay penalty.
How to Prepare for Upcoming Tax Season
Outstanding bookkeeping can assist in preparing you to file your business taxes timely and can be essential in audit events.
Besides this, multiple resources can assist in business tax preparation which is mentioned below:
IRS Paycheck Checkup Tool: The Internal Revenue Service delivers a Paycheck Checkup tool to ensure the accurate amount is being deducted from every paycheck. It is helpful if you are a business owner who gets a salary.
IRS Tax Withholding Estimator: The Internal Revenue Service Tax Withholding Estimator tool reconciles your tax evaluation to the recent deducting.
Advantages of Business Tax Extensions
Consider the positives and drawbacks of getting a business tax extension before filing an extension. It can help you decide whether it is good to get extensions. However, in this section, we will discuss the positive side of business tax extensions.
You Have Additional Time Tax File: Extra time is essential if you cannot collect all your tax-related details on time to file on the due date. You may require more time to check everything to ensure you are not missing the vital deductions and other tax items by filing before you are ready.
You Get Rid of Late Filing Penalties: A business tax extension allows you additional time to file without costly penalties, which can save the company’s resources.
Drawbacks of Business Tax Extensions
Each and every aspect of this universe has both positives and downsides and so does business tax extension. Here are some of the disadvantages you should know before going with the business tax extensions.
You Still Have to Pay: You should calculate your tax due and cover it, or there are strong chances that you can get expensive penalties for late tax payments. Eventually, you will complete your tax returns by the time you make an accurate calculation.
Additional Time Not Make Taxes Easier: Getting additional time with your tax return does not imply that your tax-related matter has become easier. It can even become complicated to recall essential deductions and other vital items.
It Can Charge Your Tax Returns Later: If you are unsure about a tax-associated thing, like if you think that there are more items where you can deduct, then you can still file your tax returns timely and file charges for your returns later if required.
Summing Up!
Filling your tax returns is a significant aspect of operating your business without any unnecessary legal consequences. Filing tax returns can ensure that your business is authorized by the government and safe from any unnecessary legal matters. However, most business owners are delayed in filing tax returns for many reasons. Here business tax extensions can save you from getting expensive penalties.
In business tax extensions, you can delay your tax returns without any charges but keep in mind that you can only get one business tax extension, so it is better to submit your tax returns on time before it is too late.
