Whether your company is a sole proprietorship, partnership or corporation, one of the most important things to do as a small-business owner is to meet all your tax deadlines. We’re now past the April 15 due date for individual tax returns, but businesses have many more tax dates they should mark on their calendars, says Johanna Fox Turner, CPA and owner of Milestones Financial Planning in Mayfield, Kentucky.
It could be costly to let those dates pass with no action. “Meeting these deadlines is about as important as being on time for your wedding,” Turner says.
If you can’t meet your deadlines, the taxes are just the minimum you’ll end up paying, says Brian Devers, a CPA with Lovelace, Norvelle and Mathews, PC, a Virginia-based accounting firm. “You’ll have penalties and interest that will add up pretty quickly, and those situations can get real messy real fast,” he says.
To help make sure your business stays out of tax trouble, know these major deadlines. (If a date falls on a weekend or holiday, the deadline is the next business day.)
Sole proprietors (and single-member LLCs)
- Jan. 15: Previous year’s fourth-quarter estimated tax payments due.
- Jan. 31: Deadline to send 1099 information returns. (If you paid an independent contractor more than $600 last year, you must send a 1099 to that vendor.)
- Jan. 31: Deadline for W-2 forms to be sent to employees.
- Jan. 31: Quarterly payroll tax return (Form 941) due for the fourth quarter of the previous calendar year. The actual taxes should have already been withheld from workers’ paychecks, Turner says.
- Feb. 28: Deadline for 1099 statements to be sent to the IRS (the same 1099s that were due to vendors a month earlier).
- April 15: Individual tax filing deadline for the previous year. File Schedule C as part of your 1040 tax return to report business income.
- April 15: First-quarter estimated tax payment due for sole proprietorships.
- April 15: Last day to file for an automatic extension of your tax return (Form 4858, which pushes the deadline back to Oct. 15).
- April 30: Quarterly payroll tax return due (Form 941).
- June 15: Second-quarter estimated tax payment due.
- July 31: Quarterly payroll tax return due (Form 941).
- Sept. 15: Third-quarter estimated tax payment due.
- Oct. 15: Individual tax return due if an extension was granted earlier in the year (on or before April 15).
- Oct. 31: Quarterly payroll tax return due (Form 941).
Partnerships (and LLCs taxed as partnerships)
Generally the same as above, except:
- April 15: Partnership tax return due. Partnerships file using Form 1065.
- March 15 (calendar year corporations): “Your tax returns are due on the 15th day of the third month at the end of the calendar year,” Devers says. That means that if your business operates on a calendar year and ends on Dec. 31, the tax return would be due March 15. Corporations file tax returns on Form 1120.
- Major due dates for information returns (1099, W-2) are the same as above.
In most cases, you can file for an extension before your normal tax return deadline and receive an automatic deferment of several months, says Diane Aksten, a CPA in Southfield, Michigan. But that’s only an extension to file, not an extension to pay. “You are still responsible to the IRS to pay what you think you’re going to owe,” she says. If you don’t pay what’s owed in time, you may be subject to late payment penalties.
Other important deadlines
If you have employees, you must also deposit payroll taxes either semiweekly or monthly, depending on your company’s reporting requirements, Turner says. If you’re not sure whether your company should be a semiweekly or monthly payer, read up on IRS Tax Topic 758 or talk to a CPA for help.
“Payroll is probably the most important deadline that you don’t want to miss as a business owner, because you’re submitting other people’s money when you’re submitting tax deposits to the IRS and the state,” Turner says.
Check with your state’s department of revenue for state-specific tax dates, including renewals for LLCs. Many state taxes are due around the same time as federal taxes, but the exact dates may vary, Devers says.
If at all possible, try to file tax returns well before the deadline, especially if you’re a sole proprietor, Aksten says. “We’re seeing higher numbers of identity theft. Some people are filing fraudulent returns using the Social Security numbers of taxpayers who are late filers,” she says. Once these taxpayers do get around to sending in their returns, it creates a red flag for the IRS and presents problems for the legitimate filers.
“The sooner that you can get your return filed, the less likely it is that somebody else will try to file a return under your Social Security number,” Askten says.
When to call in a pro
If you have cash flow problems, a professional can help you manage them in a way that’s OK with the IRS, Turner says. “There are different strategies that an accountant can help you with, that the average do-it-yourselfer may not be aware of, which could help with cash flow,” she says.
A lot of people hear “CPA” and think hiring one costs a thousand dollars or more, but that’s not necessarily the case,” she says. “However, it could literally cost you two or three times that amount if you forget to pay the IRS,” she says.
Another sign that it may be time to get help is if you get to the point where you feel uncomfortable putting together your tax paperwork, Devers says. “It’s the same as home remodeling. I may be able to do it myself when it comes to replacing light bulbs, but when it comes to electrical wiring, I need a licensed contractor. With accounting, you can start out doing the best that you can, but sometimes you may need someone with expertise to help,” he says. Working with a CPA can help you make sure your small business never misses a tax deadline, he says.
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