S Corporation Tax Return Due Date: Everything to Know
Knowing your S corporation due date in terms of taxation is imperative for the growth and success of your business.3 min read
Knowing your S corporation due date in terms of taxation is imperative for the growth and success of your business. In order to remain in good standing, all of the required forms must be filed on time and all associated payments must be made. Due diligence from the start will help you prepare for the future. That way, when tax season quickly rolls around, you will not be scrambling. Taking a proactive approach can also help you avoid steep penalties and fees.
What Is an S Corporation?
As a "pass-through" entity, an S corporation enjoys unique tax benefits. All of the losses and profits are reported by the corporation's shareholders. This means that the company is not taxed at the corporate level. This helps the corporation avoid double taxation. Although an S corporation does not need to pay corporate taxes, they still need to file an informational tax return, in addition to other IRS forms.
When Are S Corp Tax Returns Due?
If you would like to be treated as an S corporation, you will need to file Form 2553. By making a formal election, S corporations are able to pass on all of the company's credits, losses, deductions, and income to the shareholder level. As stated above, these types of businesses do not need to pay any federal taxes, but they must prepare a federal return using Form 1120S.
Each shareholder is also given a K-1, which indicates their exact portion of all profits, deductions, and losses. These values are then reported on their personal tax returns. Although corporations do pay taxes at the federal level, state taxes may be due depending on the state in which you reside. S corporations must also submit forms in relation to payroll taxes.
Generally, tax returns are due on the fifteenth day of the third month of the corporation's fiscal year. For example, if your calendar year ends on December 31st, you will need to file Form 1120S by March 15th. If you would like to obtain an automatic six-month extension, file Form 7004 and deposit an estimate of what you will owe. If your due date lands on a weekend or holiday, your taxes will be due the following weekday.
In order to report employment taxes, you must file Form 941. This form will include all quarterly wages, as well as withheld Social Security and Medicare taxes. Know that this form will be due every three months — or April 30, July 31, October 31, and January 31.
What Else to Consider When Filing Taxes
The associated stress and responsibilities during tax season are high when you have a business solely in the United States. For those who also conduct business overseas, this process is even more complex. If your company has foreign partners, shareholders, or even accounts, you must stress how important your deadlines are.
For example, if your corporation includes shareholders who are not United States citizens who also owe more than 25 percent, they will need to file Form 5472. If this Form is filed late or is not completed properly, a minimum monetary penalty of $10,000 could be charged per shareholder per period.
If your business stopped operating this tax year, make note of the exact date. Moving forward, the only property or cash that should remain in your business is the amount that will be distributed to your investors. Also, retain enough to pay your final taxes. In this case, you would file a short year return. This means that you would only be responsible for paying taxes during the time you were officially conducting business. Please note that a short-year tax return is also an option for seasonal businesses.
As your S corporation grows and expands, your taxes will become more and more complicated. This is why it is imperative that you remain organized. Keep up-to-date with all of your documentation so that when tax season arrives, you know exactly what to file and when. After all, penalties can set your business back and hinder the level of growth you projected. If at any point you are unsure about what is expected of you, please seek a professional opinion.
If you need help to better understand your S corporation's due dates in terms of taxation, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.