Business Returns due and the importance of an extension
Selecting a proper entity type for your business is an important step for small business owners. There are central considerations that you should take into account when selecting an entity type as it may change over time as your business grows or matures. Many small business owners form either a Sole-Proprietorship or an LLC, and some make the election on their LLC to be taxed as an S-Corporation.
If you are a Sole Proprietor or a Single-Member LLC, then you have until April 15th to file your business tax return. It will be filed on a Schedule C that will be attached to your personal tax return.
If you are a Multi-Member Partnership, you will most likely be filing tax Form 1065 for your tax return. If you elected an S-Corporation, you will most likely be filing tax Form 1120-S. Both of these forms are due March 15th.
If you are unable to file your 1065/1120-S tax returns on time, it is important to file an extension. Failing to do so can result in substantial penalties. The IRS issues a penalty of $195/month per partner/member for a maximum of 12 months. If you have three partners in your business, and you are a year late in filing the business tax return, you are looking at a minimum of $7,020 in penalties. Many states have similar penalties as the IRS does.
Filing an extension will give you until September 15th to file your 1065 or 1120-S returns.
If you have unfiled business returns and are concerned about penalties, reach out to us. We may be able to assist.