A for-profit entity stakes its livelihood on efficiency and viability. Unfortunately, some business owners lose money due to a lack of financial literacy, especially in regard to filing taxes and knowing when they are due. If you run a company, it's your responsibility to stay on top of your taxes. Don't worry, though; we're here to help with this guide on 2021 federal tax deadlines for businesses.
Common Business Taxes
Determining the required taxes due depends on several factors, such as profit or nonprofit, type of business, and industry, just to name a few. However, some of the more common tax liabilities that entities are responsible for include employment taxes, excise taxes, Social Security withholdings, and others.
These taxes must coincide with what is reported on the required annual filing of the business return, including the Partnership (Form 1065), Corporate Tax Return (Form 1120), and, in some cases, a Schedule C if you operate as a sole proprietor (generally not the best structure to take advantage of all of the tax deductions available per the Internal Revenue Code).
The 2021 Federal Tax Deadline for Businesses
It's important to understand that different taxes have different deadlines. Companies that operate according to the calendar year can use the general outline that follows. Companies with the Internal Revenue Service's approval to operate under a fiscal year schedule must modify the deadlines.
Most business income tax returns are due on April 15 of each year. April 15 is the same date that personal tax returns are due.
Businesses are required to deposit payroll taxes semiweekly or every month. The withholdings reduce the need for employees to deposit their requirements personally. However, they must monitor what is being withheld to ensure that their tax obligations are met.
The excise tax is for the business entity whose enterprise provides specific goods or services like fuel, tobacco, alcohol, manufacturing, and more. The tax is assessed as a percentage or charged per unit. It is paid quarterly, within 30 days of the end of the quarter.
Estimated Income Tax Payments
Throughout the tax year, estimated taxes (ES payments) must be submitted to the Internal Revenue Service every quarter, on April 15, June 15, and September 15, with the final payment due on January 15 of the following year. These self-employed tax dates are easy to remember. Many independent health insurance agents have a quarterly payment responsibility, and the occupation fits into this category.
Tax Deadline for LLC
The tax deadline for an LLC is consistent with the personal tax return. The LLC tax return is due on April 15 of the year following the business tax year that ended on December 31. An LLC that has partners must include IRS Form 1065, the U.S. Return of Partnership Income. The income will flow down from Form 1065 to Form 1040, U.S. Individual Income Tax Return. Form 1040 is where each partner's share of the profits and losses is reported.
When Are Business Taxes Due in 2021?
Unless there is a fiscal year designation, businesses have a responsibility to submit their tax returns by April 15, 2021. For corporate entities, Form 1120 is used to report the business activity of the prior year. Some corporations may show a balance due on the tax return. If so, they can deposit the amount due or submit payment with the paper document when it is mailed in for processing.
There may be times when the entity needs additional time to file Form 1120. It is common to request an extension. Keep in mind that an extension is only for the time to file the business tax return but not an extension to pay the taxes. As a result, penalties begin to accrue if taxes are not submitted by April 15, 2021. If necessary, the corporation should file the extension request by April 15, the last day to file taxes with extension.
Business Tax Filing Extensions
Companies can file a six-month extension by submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. As long as Form 7004 is filed in a timely manner, the six-month extension will be granted.
In some cases, an additional extension beyond the six-month extension is filed. An explanation is required by the six-month due date. There are no further extensions granted beyond the second extension. The result is an untimely filed return, and penalties accrue based upon an outstanding balance. Generally, no penalty is due as long as the tax return is filed.
Can You File Business Taxes Electronically?
The Internal Revenue Service does offer a platform that allows the request to be made online. E-filing Form 7004 is safe and secure. Once the request is submitted online, there will be confirmation of the submission that you can secure and keep for your records. Keep proof of verification to ensure that you are not assessed a penalty for a delay in the submission of the form. Remember, the Internal Revenue Service is aggressive.
What Is the Deadline for Business Tax Filing in 2021?
There are standard deadlines that Congress has laid out in the Internal Revenue Code. Many deadlines have little flexibility for an extension request. Some are general rules while others are industry-specific. The following is a snapshot of the deadlines that a company can expect throughout the calendar year of 2021:
Individual income tax returns are due on April 15. If the date falls on the weekend, then the due date is the following Monday. If April 15 is on a holiday and during the week, the due date is the following business day.
Estimated tax payments for 2021 will be due April 15, June 15, and September 15. The final estimated tax payment for the tax year 2021 is due January 15, 2022. Penalties accrue once the payment is made after the deadline.
Partnership returns, presented on Form 1065, are due March 15, 2021. These are eligible for an automatic six-month extension.
C corporation tax returns, presented on Form 1120, are due April 15, 2021. This income tax return is eligible for an automatic six-month extension by filing Form 7004 by April 15.
S corporation returns, presented on Form 1120-S, are due March 15, 2021.
Note: For the C and S corporations, the dates are consistent with those operating in unison with the calendar year. If a fiscal year election was requested and authorized, Forms 1065 and 1120 are due on the 25th day of the fourth month at the close of their respected fiscal month.
Foreign partnership returns are due on March 15, 2021.
Trust, estate, and gift tax returns have a filing date of April 15, 2021.
Nonresident alien returns have the filing date of April 15, 2021.
Exempt organization returns are required to be filed by May 15, 2021. The exempt tax return is an informational tax return. It will alert the Internal Revenue Service of the cash flow of the entity along with justifying the protections offered by the specific exempt status.
When are corporate tax payments due? For the tax year 2021, a company must use quarterly deadlines based on the calendar year compared to the fiscal year. If your company utilizes a fiscal year, contact the Internal Revenue Service or your financial advisor for a customized calendar for your company's corporate tax return due date for 2021.
Penalties for Untimely Filing of Business Taxes
The Internal Revenue Code authorizes penalty assessments for underpaying and the late filing of tax returns. Many penalties are based on the amount due and can quickly double due to an authorized interest assessment. It can double in a surprisingly short period.
We have provided general guidelines of many of the deadlines and tax returns required to keep a business in good standing with the federal government. However, it's important to stay abreast of deadlines and forms as tax laws and deadlines can become complex and make timely filing a challenge. Immediately secure a tax expert whose job is dedicated to tax law.
Following these guidelines will help eliminate the need to submit a request to collect on the business interruption insurance policy that many companies have secured. In most cases, business interruption insurance policies may not cover financial downturns due to an unpleasant visit from the Internal Revenue Service. If there is ever a question about the tax law, contact the Internal Revenue Service for assistance.
For more business advice, reach out to the experts at CoverWallet. We can offer tips to help you manage your business and make sure you have the right insurance products for your needs.