When are business taxes due and how can you prepare now?
This article was originally published on Aug. 18, 2017, and was updated on Jan. 10, 2019, Jan. 15, 2020 and May 10, 2021.
This content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
As the expression goes, “nothing is certain but death and taxes.” Everyone knows you have to pay the IRS when you earn an income, but not just individually. Companies, whether giant corporations or sole proprietorships, have to pay taxes — and they have to do it on time. So, when are business taxes due?
Your clients will not accept getting what they paid for whenever you get around to finishing it. You set expectations for when your client will receive your goods or services, and you deliver on time. If you don’t, you risk getting a reputation that you are difficult to deal with, and will likely leave your client in a bad spot.
The same holds true for taxes.
There are certain deadlines you need to meet for federal taxes, and there are fines and penalties you could be charged if you don’t. Let’s take a look at some of the income tax due dates you might need to know as a business owner.
Related: 2020 tax calendar for small business owners
When are business taxes due for different types of companies?
To get an idea of what payments are collected by the IRS from businesses on a month-to-month basis, take a look at its tax calendar. Then, start to determine what you might personally owe and when based on the type of business you own.
1. Sole proprietorship
If you are working independently and have not been set up as an LLC with the IRS, you are a sole proprietor. Your income taxes will be designated on Schedule C of your individual Form 1040, and your self-employment taxes will be calculated on Schedule SE (see this guide for more on self-employment taxes). In addition to filing your income tax return, you might need to pay estimated quarterly payments.
So, when are business taxes due for sole proprietors?
Here are the important dates you need to keep in mind as the sole proprietor of your business:
- April 15th:If you pay estimated taxes for the current year, the first installment will also need to be paid at this time.
- May 17th: Your individual 1040 is due, which includes your income taxes for the previous year.
- June 15th: The second installment payment of estimated taxes is due.
- September 15th: The third installment of estimated taxes is due. In addition, if you filed an extension for your 1040, the final return for the year is due.
- January 15th: The final installment of your estimated taxes is due.
Related: What you need to know about deducting startup costs
If you are co-owner of a business with someone else, you need to file Form 1065 to report your taxes. This return is due on March 15th. Both partners will need to keep a copy of Schedule K-1, which shows each person’s share of the income and which items are reported on his or her individual return. Keep in mind that estimated taxes are not paid by the business itself, but by both partners independently.
3. Limited Liability Company (LLC)
If you are working on your own and have registered as a Limited Liability Company with the IRS, your income and expenses will be recorded on Schedule C of your individual 1040, and your self-employment taxes will be calculated on Schedule SE, just as they would be for a sole proprietor.
The return is due May 17th, and your quarterly estimated tax payments must be submitted by April 15th, June 15th, September 15th and January 15th for the current year.
Related: Know your business entity options
The due dates for corporate tax returns differ depending on whether you have an S corporation or a C corporation, and they will require different forms (1120S and 1120, respectively).
The deadlines to meet when running a corporation are below:
- March 15th: S corporation tax return is due
- April 15th: C corporation tax return is due
- April 15th: First installment of estimated taxes due
- June 15th: Second installment of estimated taxes
- September 15th: Third installment of estimated taxes
- December 15th: Fourth installment of estimated taxes
Why is there a difference between when business taxes are due for an S corporation and a C corporation? Most likely, this is because, like a partnership return, a K-1 form needs to be sent to the shareholders of an S corporation to include in their personal tax return.
Related: How to know when to incorporate your business
Common mistakes when filing business taxes
Now that you know when business taxes are due, it’s important to learn how to submit them correctly so you avoid penalties. There are a few common mistakes businesses sometimes make when trying to meet filing deadlines and preparing for tax returns. These include:
Not including all forms: Make sure that when you send in your tax forms, you include all of the related forms and schedules. If you don’t, you could face late-filing penalties.
Not talking to your accountant early enough: Trying to throw together a return in a week or few days could lead to costly mistakes.
Not reviewing all the figures before filing: A mistake could lead to penalties, additional taxes (due to deductions being missed), or a time-consuming audit.
Not filing an extension: An extension will give you additional time to get everything done correctly. Keep in mind, however, that you will still have to pay any taxes that were owed on the original return due date, even if you file an extension.
Related: How to file for a tax extension
Not reviewing last year’s return: This can act as a guide for all the information you need in the current year.
Planning for tax due dates
Below are some simple ways to plan ahead for your tax due dates so you do not disrupt the flow of your business’s operations when deadlines hit:
- Know when the dates for filing taxes are due. Noting the due dates for the year in advance will help you set a schedule. Mark them on your calendar and formulate a plan for making sure you are ready when they come around.
- Complete bank reconciliations. While this might sound strange, ensuring your reconciliations are complete before the due dates will keep your accounting records up to date and all items of income and potential deductions recorded for when you need to know them. Here are a few tips to make sure your financials are ready for year-end.
- Set up a meeting in December with your accountant. This will allow you to create a plan of attack and give you and your accountant a chance to discuss potential problem areas.
Knowing when business taxes are due is an important step in being proactive about planning your returns and payments. Talk to your CPA about the deadlines for your type of company and formulate a schedule so you consistently file everything on time.
Image by: Roman Bozhko on Unsplash
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