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A few important business tax-filing deadlines are on the horizon. If you’re a freelancer or sole proprietor, September 15, 2021 is your third-quarter estimated tax payment deadline. September 15, 2021 is also the extended tax-filing deadline for S Corporations, partnerships, and multi-owner LLCs. And October 15, 2021 is the extended tax-filing deadline for single-owner LLCs, sole proprietors, and other corporations that filed for a tax extension. To learn more about when and how to file your taxes, we recommend touching base with an accountant in your area.
Depending on how your business is structured, your business tax-filing deadline for the 2020 tax year is either March 15, 2021 or May 17, 2021. Looking for more specifics? Here’s a full list of tax deadlines:
Need a tax software to file? Here's a list of our best tax software for 2021.
The Internal Department of Revenue (IRS) requires different forms, rates, and filing dates depending on the official business entity of your company.
In this type of structure, a business owner keeps their business assets and personal assets tied together, so a sole proprietor pays taxes as part of their personal income tax return. If you don’t register your small business as any particular type, a sole proprietorship is the default structure.
Like a sole proprietorship, a partnership also pays taxes as part of each partner’s personal income tax return. But unlike an LLC, partners are still liable for any business debts.
When it comes to federal taxes, an LLC functions much like a partnership would. But a small business can file with its state to be organized as an LLC as long as it meets the requirements.
An S corporation complies with some of the typical corporate obligations and issues (such as passive income tax and built-in gains tax). But an S corporation is generally smaller, and the owners must pay taxes on their portion of the business income as part of their personal tax return.
Once your company is fully incorporated, a C corporation structure is the default option. C corporations file and pay a corporate tax return instead of passing income onto the owners’ personal taxes.
COVID-19 upended a lot of business finances, so it makes sense if you aren’t quite ready to file all that tax paperwork quite yet. If that describes your situation—or if you aren’t ready to file tax paperwork yet for any other reason—you can apply for a tax-filing extension.
However, bear in mind that a tax extension merely extends your filing deadline. You must still pay your estimated taxes on your business’s tax-filing deadline, which is either March 15 or May 17. If you don’t pay your estimated taxes on the day they’re due, the IRS will charge you a late fee.
An extension will give you six more months to file your tax paperwork. You must apply for a tax extension no later than your typical tax deadline:
Get your maximum refund for your small business with TurboTax.
It’s fastest and easiest to apply for a tax-filing extension online, but again, the process differs depending on the type of business you own:
Now that you have an idea of what the business entities are and how to get an extension on your tax return, let’s dive further into the forms you need for filing.
If you own a sole proprietorship—or if you’re the only owner of your LLC—then you’ll simply need to file Schedule C as part of your Form 1040, which is the form you file with your personal tax return.
Partnerships, S corporations , and LLCs with multiple owners need to fill out Form 1065. These businesses pass profits (or losses) through to the business owners, who report their earnings on Schedule E on the 1040 Form. They should receive a Schedule K-1 form to help them fill out Schedule E.
C corporations should file their corporate taxes with Form 1120. Owners receive a Form 1099-MISC to report any dividends on their personal income tax returns.
If you own a business with employees, you’ll need to file Form 941 along with the payroll taxes you withhold from employee paychecks and remit directly to the IRS. (You should remit these taxes quarterly, also with Form 941.) Note that household employers are also required to withhold payroll taxes, so they also need to file Form 941.
If your business is subject to any excise taxes, you’ll need to file Form 720. Finally, if your state has a sales tax, you’ll need to fill out a state form for a sales tax return. You can find information on your state’s tax requirements via the IRS’s list of state government websites.
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Wondering if your business should pay taxes quarterly or annually? If your business has employees, you’ll need to file Form 941 (along with your employees’ payroll taxes) every three months. You will also need to pay a quarterly tax if your business sells specified goods, like gasoline or alcohol, that require an excise sales tax.
If your business doesn’t fall under those categories, figure on paying at the usual tax time. But if you’re worried about having a large sum of cash on hand to make a lump-sum annual payment, consider paying quarterly instead. Additionally, freelancers are required to pay estimated quarterly taxes and to file an end-of year tax return.
All quarterly tax payments should be made on the following schedule:
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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