If you’ve recently formed your small business as an LLC with an S Corporation, congrats! You can now enjoy the tax benefits that come with having a pass-through business entity, along with the legal protection of your personal assets.
If you have an S Corp, it’s important to note this year’s filing deadline for your tax returns.
S Corp Tax Filing Deadline
S Corps will need to file a tax return and pay any taxes owed for 2018 by March 15, 2019. Note this is a month earlier than the April 15 filing deadline for individual tax returns, so it’s best not to delay!
Each individual shareholder will need to file a Form 1120S, which is an S Corp’s annual business return. The 1120S is part of the Schedule K-1document. This tax return is how each shareholder of an S Corp reports income, losses and dividends. You’ll be responsible for paying any taxes, interest and penalties due.
An S Corp must also file a Schedule K-1 for each of its shareholders by March 15, and is responsible for payroll taxes with Form 940 every quarter, explains Katherine Pomerantz, founder of The Bookkeeping Artist. Shareholders of S Corps must have these payroll filings plus their K-1 to file their own personal income tax return by the April 15 deadline.
S Corp Extension
If you need more time to file your tax returns for your S Corp, you can request a six-month extension by filing Form 7004. Once you receive an extension, you’ll have until September 15, 2019 to file your tax return. While you can receive more time to file your returns, you’ll still need to pay for any taxes due. Otherwise, expect to pay penalties (which we’ll discuss below).
While you can get an automatic six-month extension for Form 1120S, it’s easier on everyone to file on time, explains Pomerantz. She points out that you might also be subject to interest, failure-to-pay fees, and failure-to-file fees for any tax forms that aren’t filed on time.
Penalties for Filing Late
If you aren’t able to meet the March 15 filing deadline (extensions included) — or your return doesn’t include all the required info — expect to incur penalties.
If no tax is due, each shareholder will be charged a late-filing penalty of $200 each month you’re late (up to 12 months). So if there are two shareholders in your S Corp and you’re two months late filing your tax returns, expect a total of $800 in penalties.
If you do owe taxes, you’ll need to pay 5 percent of the unpaid taxes for each month you’re late in filing your return. That’s on top of the aforementioned late-filing penalty — so it’s in your best interest to file in the most timely manner.
Other Late Penalties
If you’re late in paying your taxes, you might need to pay half a percent of unpaid taxes each month (up to 25 percent of the unpaid amount). And if you don’t provide all the required information on your Schedule K-1, you might need to pony up $270 for each incomplete Schedule K-1 submitted.
If you have questions on filing your tax returns for your S Corp, reach out to a tax professional for guidance. And remember that Incfile is here to help. Our tax specialists can answer your questions, and you can also work with one of our tax professionals to file your business taxes with ease and confidence.