When you’re busy growing your business, it’s not unusual to drop the ball on some important items, like filing your business taxes. If you haven’t filed your taxes before the tax deadline, then you may need to file for a business tax extension.
As always, when it comes to your taxes, it’s important to talk to your certified public accountant (CPA) or tax professional first. They know the laws and requirements and can ensure you have all the information you need to make the best decision for your business.
Why apply for a business tax extension?
If you’re not going to make the April 18 tax deadline, filing for a business tax extension can save you from paying penalties on what you owe.
Even with an extension, you still need to estimate what you owe and pay most of that amount by the tax deadline. If you’re behind on gathering the information you need or if you still need to talk with your accountant, then you may want to file an extension to ensure that your taxes are prepared properly.
Filing an extension is quick, easy, and free of charge if you do it by the April 18 deadline. If you’re also behind on your state taxes, many states accept the federal IRS tax extension form as well, so be sure to check with your state’s tax department about any extensions. As long as you file for an extension before the April 18 deadline, you can avoid a late-filing fee from the IRS.
Pros of filing for a business tax extension
Filing a business tax extension will give you an additional six months to file your taxes. This gives you more time to gather information, review it with your accountant, prepare your filings, and ensure accuracy and completeness. With more time to file, you’ll avoid having to file an amended return later in the year.
Tax season is understandably a busy time for accountants and tax professionals, so if you get a late start they may not be able to fit you in by April 18. Rather than trying to finish your filings yourself in this scenario, you could file for an extension so you have enough time to meet with them.
You might even save money with an extension in this case. Some accountants and tax-preparation agencies charge higher fees leading up to the April 18 filing date because of the volume of returns that they’re working on. You may be able to get a discount if you file an extension and work with them during their slower season, like over the summer.
Cons of filing for a business tax extension
While filing an extension will give you more time to submit your tax paperwork, it does not mean that you can delay payment on what you owe the IRS. The extension will avoid a late filing fee, but you’ll still accrue interest on what you owe until you make your full tax payment.
The best strategy is to get started on your taxes early and file and pay them on or before the deadline. When your business is growing and you need to raise money from a lender or investor, they’ll want to see your most recent tax returns. You’ll also need your tax returns to see if you’re eligible for special grants or loan programs from the state or federal government.
Important deadlines to remember when applying for a business tax extension
Whether you plan on filing or applying for a business tax extension, there are some key dates that you need to know:
- If you owe taxes, you still have to pay them by the April 18 deadline to avoid penalties.
- If you plan to file an extension, you need to file on or before the April 18 deadline, and it’s always best to do this as soon as you realize that you won’t meet the filing deadline. Filing for an extension means that you won’t be charged a late-filing fee.
- If you do file an extension, you have until October 15 to file your taxes. Get your filing done well before the extension deadline otherwise your accountant might become busy again with last-minute filers.
- If you get an extension, don’t forget that you still have to pay estimated taxes for the current year as you normally would. The extension only allows you to extend the timeline for your filings, not for payments due in the current tax year.
Talk to your accountant or tax preparer as soon as possible
With just weeks left before the deadline, talk with your accountant now about realistic expectations for filing by April 18. If for any reason you don’t think that you’ll meet the deadline, prepare to file an extension now and get it into the IRS on or before April 18. And don’t forget, if you owe taxes, you must make any outstanding payments by or before April 18 to avoid interest and/or penalties that can set you and your business back significantly.
Pursuit can help if your business needs a financial boost
Although business loans from Pursuit can’t be used to pay business or personal taxes, we can help you get funding for your business’s operational needs. That way, you can stay on top of business tax obligations while still having the funds you need to stabilize, strengthen, and grow your business. Talk to us today about our loan options and learn how we can keep your business moving forward.
