If you don’t think that you’ll be able to prepare your business tax return and gather the necessary documents on time, consider requesting a tax extensions. You may already know that you can get an extension of time to file your personal income tax return, but what about your business return?
It is easy for work and family obligations to pile up on you quickly, and worrying about filing taxes can be a real headache.
A tax extension will give you extra time to file your return — 6 months for personal returns, and 5 or 6 months for business returns (depending on the type of entity).
Personal income tax extensions can be requested using IRS Tax Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return).
Business income tax extensions can be requested using IRS Tax Form 7004 (Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns).
However, it is important to remember that an extension will only extend your filing deadline, and you are still expected to pay any taxes owed by the original due date. So do you need to file separate extension requests for your personal return and your business return?
The answer depends on what kind of business you have: a partnership, a single-member LLC, or a multi-member LLC.
Sole Proprietorship or Single-Member LLC
If your company is yours and only yours, it is likely considered a “pass-through entity”. This means that you and your business are treated as one-in-the-same by the IRS for Federal tax purposes. Therefore, you are required to fill out Schedule C for your business, along with your personal 1040 tax form.
Taxpayers who fall under this category do not need to fill out separate requests for both a personal and business tax extension. If you have a sole proprietorship, you only need to file a personal tax extension request (IRS Tax Form 4868). Make sure you file Tax Form 4868 by the original filing deadline of your personal income tax return (usually April 15th) to avoid penalties and late fees.
Once the IRS approves your extension request, this will suffice for both your personal and business tax extension needs.
Partnership or Multi-Member LLC
Is your business owned by more than one person? Are you one member in a multi-member business or partnership? If this is the case, you will need to file separate tax extension requests for your business and personal tax returns. This is because the company is not just associated with you — it is a completely separate entity that requires its own tax extension application form.
Bear in mind, your partner(s) will all have to file their own tax extension requests as well since the business isn’t solely associated with (either of) them either. You will have to discuss with your business partners about whether to file for a business tax extension, as miscommunication can lead to serious tax problems.
For instance, you don’t want one partner to request a tax extension and expect a later filing deadline, while another partner files their business return on time.
You can apply for a business tax extension using IRS Tax Form 7004. This form is meant to be used by C-corporations, S-corporations, partnerships, and certain trusts. Make sure you file Tax Form 7004 by the original filing deadline of your business tax return (usually March 15th) to avoid penalties and late fees.
In general, if you are required to file a separate income tax return for your business and yourself, you will also need to file separate tax extension requests. On the other hand, if you report your business income on your personal tax return and are not required to file a separate business tax return, then you probably only need to file one tax extension request.
If you need further help or have questions about requesting a business tax extension, consider using a company like FileLater to file your tax extension form.