While you can deduct many different business expenses from your tax liability, not every business will receive a tax refund. Unlike an employee’s income, which has a part of every paycheck withheld for taxes, a business owner or independent contractor has no automatic system in place. But an accountant or tax software can help you estimate taxes beforehand to make sure you’re covering your expected taxes with quarterly payments.
Technically, only a C corporation can receive a refund for the business itself. But owners of pass-through entities (LLCs, sole proprietorships, S corporations, and partnerships) can receive personal tax returns if their income tax and self-employment taxes are smaller than their tax payments and deductions. In other words, you get a return if your business overpays on your estimated tax payments throughout the taxable year.
If you do get a refund, you can expect it about three weeks after you file. So it makes sense to get started on your business tax return right away—save yourself time spent worrying and get your refund earlier if you’re eligible.
Tax season always seems to arrive sooner than you’d like, and that’s especially true after a year like 2020 (when the tax season for businesses literally extended into the summer). But now that you know when business taxes are due in 2021, we hope you’ll feel more confident heading into tax season. You can do this.
Want help filing taxes on time? Check out our list of the year’s best online tax-filing software for small businesses.
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