Have you already set up a limited liability company (LLC)?
If yes, it is your responsibility to pay your LLC business taxes on time. The tax returns for your business depend on the type of business entity you select for tax purposes. The entities include sole proprietorship, partnerships, and corporations. For this purposes you can choose from the best registered agents we reviewed here earlier.
But what are LLC taxes, and when are they due dates?
What Are LLC Taxes?
LLC taxes refer to taxes that members of a limited liability company must pay. The LLC taxes include income tax which can get paid as estimated tax. The earnings of the LLC members are not subject to employee withholding.
LLC taxes can also include self-employment taxes, which include social security and medicare. The rule is that the LLC members (owners) actively involved in running the LLC should pay self-employment tax. Other members of the multi-member LLC who are not actively involved in running the company can be exempted from the taxes.
How Do LLCs Pay Their Income Tax?
A limited liability company will pay taxes depending on the number of members and how it requests the IRS to treat it regarding income tax purposes. The IRS treats the limited liability companies as disregarded entities, partnerships, or corporations.
Additionally, it will treat a single-member LLC as a disregarded entity. The company itself doesn't pay taxes. However, the members of the company pay taxes as sole proprietors do.
LLC members should use Schedule C to report LLC income and then file it using Form 1040.
For domestic LLCs with more than two members, IRS classifies them as partnerships. The LLC still doesn't pay taxes. However, the LLC members pay taxes the same way partners in a partnership do. The multi-member LLC should use IRS Form 1065 to report the partnership's income. Additionally, they should provide a copy of the Schedule K-1 form with each member's share of income.
Additionally, each of the LLC members should report the earnings from Form 1065 on Schedule E and then file it with Form 1040.
Alternatively, a limited liability company can file Form 8832 to ask the IRS to treat it as a corporation. In such circumstances, the LLC will pay its taxes as a corporation does. It should use Form 1120 to report the corporate income. S corporations should use Form 1120s to report the corporate income. The S corporation members should report their income using Schedule-K1 of Form 1120s.
When Are Your LLC Taxes Due?
As mentioned earlier, the due date for your tax payments is dependent on various factors, including the type of entity. Other considerations include:
Tax Year: Fiscal Year Vs. Calendar Year
For partnership or corporation business tax returns, you should select an accounting method for your tax year. This can be a calendar year or a fiscal year.
A fiscal year refers to a 12-months period that you designate as the business year for your LLC.
For instance, you have your fiscal year running from March 30 to April 1.
Alternatively, you can choose a calendar year. If you select a calendar year, your company will operate with a business year from January 1 to December 31.
You can file an application to adopt, retain or change tax year if you wish to change your business year. This enables you to switch from a calendar year to a fiscal year or vice versa.
Corporation Tax Dates
You can choose to elect your LLC as a corporation for tax purposes (see also 'Best LLC Formation Service' review). If you elect your LLC as a corporation, you have various options for tax returns.
If you go for the calendar year for your business, your taxes will be due by April 15.
If you opt for a fiscal year, your taxes will be due on the 15th day of the fourth year after the year ends.
For instance, if your year ends by December 31, they should file and pay the taxes by April 15.
S Corporations
S Corporations should use a calendar year instead of a fiscal year, and the taxes are due by March 15. They should file a report on Form 1120S and provide Schedule K-1 to the shareholders by the same date.
Sole Proprietorship Tax Dates
As mentioned earlier, IRS treats a single-member LLC as a disregarded entity. That means the IRS ignores that you've set up the LLC and taxes you as a person. The income and expenses from the LLC are reported on your personal tax return, due on April 15.
Filing your LLC is a straightforward process if you follow the correct steps and meet the necessary deadlines. Not meeting the deadlines for filing your taxes could put your company in noncompliance.
What's the Deadline For Your Tax Returns?
You can send your tax returns via snail mail. If you send by mail, IRS considers it "on time" if it is addressed correctly, has enough postage, and is in the mail before the close of business on your filing deadline.
Alternatively, you can e-file the returns before midnight on your filing deadline.
If you are self-employed, you pay taxes throughout the year in four sums instead of one day. These are known as estimated tax payments. The due date for the 2021 estimated tax payments is April 15, June 15, September 15, and January 15 (2022).
When Are 2021 Tax Extensions Due?
You have up to the tax day to file for a tax extension.
If you are an individual, you can file for an extension right on April 15. Partnerships and S corps can still get an extension on March 15. The last day for S corporations to file for a 2021 tax extension is April 15.
2021 Tax Deadlines
Here is a list of tax deadlines in 2021:
Estimated Quarterly Payments
The fourth and final estimated quarterly payments were due on January 15, 2021.
Form W-2 Filing Deadline
If you have employees, you should fill out two copies of the W-2 form.
You should send one copy of the form to IRS and the other copy to the employee.
S Corporations and Partnerships Tax Returns Due
Partnerships and S corps don't pay or file an income tax return. The tax is paid on the incomes of individual partners or shareholders.
The deadline for filing the S corporation business tax return or partnership return was on March 15, 2021.
State Tax Returns
Each state has its own tax deadlines. Here is a list of various state deadlines:
The dates for the individual tax returns for the tax year 2021 were moved from April 15 to May 17. If you have an income of less than $60,000 for the tax year, you can use IRS free file to e-file your returns for free.
If your income for the tax year is more than $66,000, you can use the IRS free fillable forms.
The May 17 deadline also applies to sole proprietors filing Schedule C on their personal tax returns. It was also the deadline if you wished to file an extension for the filing of your individual tax returns.
Tax filings have been extended for sole proprietorships, C corporations, and individuals in Oklahoma, Texas, and Louisiana states due to the winter storms.
Estimated Quarterly Payments
If you are a partnership or an S corporation that had previously filed for a tax extension, the tax return is now due.
The third estimated quarterly tax payment for 2021 is due by September 15, 2021.
Some of the forms you require include:
- Form 1120S for the income tax return for an S corporation
- Form 1066 for U.S. return of partnership income
- Form 1040-ES for the estimated tax for individuals
If your C corporation applied for a tax extension, your income tax return is due by October 15, 2021. Use Form 1120 for U.S. Corporation income tax return.
If you wish to reduce your taxable income for the calendar year, you can start making tax moves that will help you grow your business. If you haven't started making the tax moves, now is the time to do so. The deadline for making any tax moves for the 2021 tax year is on December 31, 2021.
What happens if you don't pay your taxes on time?
Ensure you pay your taxes by the due date. If you don't do so, you'll pay the penalty for the late payment. The penalty includes an additional 0.5 % of the unpaid due each month until you pay the original tax amount.
When Can You Expect a Tax Refund for 2021?
You can start filing your tax returns for the year 2020 after February 2021.
In general, you can expect to get your tax refund in about three to four weeks after filing your returns. However, that is not an IRS promise. It's hard to estimate how long it will take to have your refund in these unprecedented times.
Final Thoughts
Filing your LLC taxes is vital. It is an effortless and straightforward process if you follow the right steps. Ensure you know when the taxes are due and pay them by the due date to avoid penalties. Not filing your tax return also puts your business at risk of noncompliance.