Many of us recognize April 15th as tax day, and though that’s true for individuals, sole proprietors, and C Corps, S Corps and Partnerships must abide by different rules. According to the IRS, these two business entities must file their taxes by the 15th of the third month, or March 15. And, if you fall into that category, that means your taxes are due this Friday.
If you have yet to file your business taxes, and your business is considered an S Corp or Partnership, then you’ll need to act quickly if you want to meet the looming deadline. Here are a few considerations and tips that can help you beat the clock, plus one solution if you can’t.
Check New Tax Rules
In December of 2017, the current administration passed the Tax Cuts and Jobs Act, which directly impacted 2018 taxes for both businesses and individual files. For some businesses, particular those that are considered pass-through entities, like S Corps and Partnerships.
There are updates, including those that impact the following
- Deductions from qualified business income
- Limits to certain business activities
- Limits to business interest expense deductions
- Depreciation rules
For a full list explanation of how the Tax Cut and Jobs Act may impact your business, you can review the IRS Publication 5318: Tax Reform, What’s New for Your Business.
Keep in mind that many of these changes will impact your quarterly taxes and therefore should be considered in future planning, not just when filing your 2018 tax return.
Determine Required Forms
While all small businesses must file taxes, filing as an S Corp or a Partnership will require the use of different forms. For example, an S Corp will likely be required to file the 1120S or 1120 Sch. K-1, while a Partnership will be required to file form 1065.
There are, however, several documents that you may need to complete regardless of whether or not you are filing as an S Corp or a Partnership. This typically includes employment tax forms, like 940 or 941. In addition, some businesses may also need to file 1099 and W2s.
Because tax requirements vary based on a variety of factors, including the type of industry into which the business falls (e.g., agriculture), employees hired, and business activities, it’s best to consult the IRS website for a full list of forms for which as S Corp or Partnership may be liable.
For example, both S Corps and Partnerships must file.
Gather & Verify Required Information
At this point, you likely have all the information you need. Generally, this includes information about payroll, shareholders, income, gains, losses, etc. Fortunately, if you’ve been using accounting and human resource software, much if this information should be readily available, with some programs offering easy integration with tax software.
However, if you’ve reviewed all the required forms and find that you are missing information, then you’ll need to act quickly. Without the proper information, you may need to file an extension.
Consider Using Tax Return Software
At this point in time, it may be difficult to secure the help of a real accountant or CPA, but if you’re not thrilled about filing taxes on your own, you may want to consider tax preparation software like TaxAct, TurboTax, or H&R Block.
Though you will need to pay to submit your taxes using this method, it can simplify and expedite the process. Plus, you may also be able to access professional advise, depending on the package you choose. Finally, using tax prep software can also help you navigate changes to the tax code and ensure that you take advantage of all applicable deductions.
File for an Extension
If you can’t complete your taxes on time, then you’ll need to file an extension or risk paying additional fees. To do so, you must complete Form 7004 by March 15th. This will give you an automatic extension with a new due date of Sept 15, 2019.
Keep in mind that while this does bide you more time, you will still need to enter a “tentative total tax” amount, which means you’ll need to know approximately how much you owe, if anything. If you fail to provide an accurate depiction, you may be required to pay fines or penalty fees.
Further, it’s important to note that Form 7004 is for federal, not state, extensions. If you don’t plan on submitting your state taxes on time, you’ll need to consult your state tax guidelines to determine the best course of action.
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