How to File a Business Tax Extension

Sometimes, your business might need a little more time beyond the deadline to prepare its tax return. Fortunately, filing an extension is fairly simple as long as you keep a few important items in mind.

Reasons to File a Business Tax Extension

There are a number of reasons why you might file a business tax extension. These include:

  • You need to track down missing paperwork
  • There’s information you need to finalize
  • You want extra time for professional consultations
  • It can save you money on tax preparation fees by avoiding the massive rush in April
  • It can extend the statute of limitations on receiving a tax return

4 Steps to Follow When Filing an Extension

As stated, the process of filing a business tax extension is quite simple, and it can even be done online. Just follow these steps.

1. Determine Which Form You Need

First off, you’ll need to determine which extension form you’ll need to fill out. There are two different forms that apply:

  • Sole proprietorships and single-member LLCs file an extension with Form 4868.
  • Corporations, including C-corps, S-corps, partnerships, and LLCs file with Form 7004.

Essentially, those who are the sole member of their businesses use Form 4868, while everyone else uses Form 7004.

2. Note The Deadline

When you file your extension, make sure you note the deadlines. These vary by the type of business you’re running:

  • S-corporations, partnerships, and multi-member LLCs must file by the 15th day of the 3rd month after their tax year ends (usually March 15th).
  • C-corporations, sole proprietorships, and single-member LLCs must file by the 15th day of the 4th month after their tax year ends (usually April 15th).

Filing your extension late can result in fines.

3. Fill Out The Form

Once you know which form you need to fill out and when it needs to be delivered, simply fill out the form per the instructions provided by the IRS. Forms may be submitted online, or they can be filled out by hand and mailed the conventional way.

It’s worth noting that once your form is submitted, it’s automatically approved. You’ll have an extra six months to complete your return.

4. Pay Any Taxes Due

Even though you can file an extension for your return, you will still need to pay any taxes due by the regular deadline. Make sure you pay at least 90% of your tax by the deadline—otherwise, the IRS could charge penalties for late payment.

If you end up paying more than you’re actually owed, you’ll be able to get your refund after you file your tax return later on.

A Few Warnings

When filing your return, there are a few items to be aware of. For instance, the IRS tends to watch businesses that file tax extensions a little more closely than it does other entities, and if you extend and end up not having to file, things can get a little messy.

Typically, you’ll want to make sure you’re acting on sound professional guidance when making these decisions, which is why talking to a tax attorney can be a vital step in handling your business’s tax burden. Our attorneys can answer any questions you might have about filing an extension or other tax-related issues.

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