Yes, the tax season is upon with the first filing date for some businesses being March 15, 2005. If you can't imagine getting your tax returns together by that date, you need not worry. The IRS automatically gives you an extension if your file the appropriate form. As you might expect, there are different forms for different businesses.
An Important Note
It is vitally important that you understand that an extension to file taxes is not an extension to PAY taxes. The IRS will give you a break on the filing date, but it wants the money now! If you anticipate that you will owe taxes, you need to send in the appropriate payment. Failure to do so could result in interest charges when you eventually get around to filing your returns.
Corporations
If you conduct business as a corporation with a fiscal year-end of December 31st, you are required to file your 2004 tax returns on or before March 15, 2005. You can get an automatic extension, however, by filing form 7004 before the March 15 deadline. Form 7004 applies both to "C" and "S" corporations and grants you an automatic 6-month extension to September 15, 2005.
While this automatic extension applies to "S" corporations, you should be aware of a quirk in the tax code. Since "S" corporations "pass through" taxes to your personal returns, the six-month extension is really only a five-month extension. To file your personal tax returns, you must report information from the K-1 issued from the "S" corporation. Unfortunately, the IRS only grants automatic extensions for filing personal tax returns to August 15, 2005.
Limited Liability Company
The IRS has never really figured out to how to handle limited liability companies. It has settled on a policy of avoiding the issue and simply treating the entity as a corporation or partnership.
Limited liability companies with more than one owner typically elect to be treated as partnerships for tax purposes. If this describes your situation, the LLC is required to file tax returns by April 15, 2005. You can obtain a 3-month extension by filing form 8736. Although form 8736 contains language regarding partnerships, you will still use this form since the IRS classifies you as a partnership for tax purposes.
If you are the sole owner of an LLC, you may be in for a surprise. The IRS doesn't recognize LLCs owned by one person. Instead, it simply considers you a sole proprietor and the rules for sole proprietorships apply. These are discussed below.
Partnership
If your business is a partnership, you are required to file tax returns by April 15, 2005. You can use form 8736 to obtain a 3-month extension.
Self-Employed/Sole-Proprietor
If you are not using a business entity, your business tax information should be reported on your personal tax return. The due date for filing your personal tax returns is April 15, 2005. You can obtain a four-month extension by filing form 4868.
Summary
Regardless of how your business is organized, the IRS will automatically grant you an extension to file your tax returns. By sending in the appropriate form, you can avoid a mad rush that will inevitably result in missing deductions and overpaying your taxes. Just make sure you pay any taxes you anticipate owing by the appropriate date.
Richard Chapo is CEO of http://www.businesstaxrecovery.com
Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.
We all love to criticize the IRS, don't we? And... Read More
IRS Tax forms can be confusing.Am I a 1099 or... Read More
Import duties continue to be significant elements in the cost... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
Once a year Canadian taxpayers are required, by law, to... Read More
If you have employees, you are responsible for paying a... Read More
Deduction of Refinance PointsAny points that you pay in the... Read More
As everyone in the U.S. knows, we have just passed... Read More
Tilting the Tax Laws in Your Favor.In order to accelerate... Read More
Marketing is a necessary expense in running practically any business... Read More
Someone once said, 'the best way to calculate your taxes... Read More
Yes, the tax season is upon with the first filing... Read More
As tax time approaches, many home-based business owners begin completing... Read More
With gas prices at an all time high before Hurricane... Read More
Over 50% of marriages end in divorce in the United... Read More
As a small business owner, it's wise to familiarize yourself... Read More
In a past article I relayed the plight of the... Read More
Emerging Legal issues of Tax compliance of e-business Self-assessment system... Read More
NOTE: This is the first in a series of 5... Read More
April 15 - The most dreaded day of the year... Read More
The Sarbanes-Oxley Act, also called the Public Company Accounting Reform... Read More
As a sole proprietor, it's wise to familiarize yourself with... Read More
Often people fall on hard times and stop paying on... Read More
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice... Read More
Hit a big one? With more and more gambling establishments,... Read More
Excerpted from the new book, "How to Do Space Age... Read More
Someone once remarked, "Next to being shot at and missed,... Read More
We need real tax reform and we need it now.... Read More
How about a Tax Tip?As we all know Taxes are... Read More
To tax or not to tax - this question could... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
The federal tax code is complex. This complexity generally arises... Read More
Should I take wages or dividends from my privately owned... Read More
The 100 year old investment-banking firm of... Read More
Deduction of Refinance PointsAny points that you pay in the... Read More
Does this scene sound familiar? It's April 7. You haven't... Read More
Many small businesses complain when confronted with the expense of... Read More
As your business grows, you are going to need help.... Read More
1812The first attempt to impose an income tax on America... Read More
Recently, I stumbled across a concept that could change your... Read More
One can never underestimate the enthusiasm that politicians have for... Read More
Should I take wages or dividends from my privately owned... Read More
As a small business owner, it's wise to familiarize yourself... Read More
The knock on the door from a Tax Inspector is... Read More
To tax or not to tax - this question could... Read More
Your days as an entrepreneur and businessperson are consumed with... Read More
Beware of advertisements that claim to settle tax debts for... Read More
With gas prices at an all time high before Hurricane... Read More
Over 50% of marriages end in divorce in the United... Read More
Import duties continue to be significant elements in the cost... Read More
Just image, you are a small manufacturing company, business has... Read More
Most people look forward to getting their tax return, but... Read More
While accountants are reaching for aspirin, millions of Americans are... Read More
Knock-Knock-KnockWho's there?The IRS!The next quarterly payment of estimated income tax... Read More
The end of tax filing extensions is quickly approaching. What... Read More
We need real tax reform and we need it now.... Read More
Choosing the right tax preparer for your business is a... Read More
Practically every small business has receivables that it cannot obtain... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
Ever wish that, as a business owner, you knew exactly... Read More
For many business owners the answer to this quandary is... Read More
An early distribution from an Individual Retirement Arrangement (IRA) or... Read More
IRS Tax forms can be confusing.Am I a 1099 or... Read More
"Deducting Meals and Entertainment"O.K. You've been working really hard on... Read More
Misconceptions, misinterpretations and just plain "untruths" are floating about income... Read More
Most people trying to make a crust online (or offline... Read More
Tax |