Michael D. Bosma
As tax season is heating up, I thought I would give my readers some runway on the tax due dates that are on the horizon through March 31:
All businesses need to file information returns (for example, Forms 1099) for certain payments you made during 2020.
All employers — file Form W3, Transmittal of Wage and Tax Statements, along with Copy A of all the Forms W2 you issued for 2020. If you file Forms W2 electronically, your due date for filing them with the SSA will be extended to March 31. The due date for giving the recipient these forms remain January 31.
Employees who work for tips — if you received $20 or more in tips during February, report them to your employer.
- S Corporation election: File Form 2553, Election by a Small Business Corporation, to elect to be treated as an S corporation for the 2021 calendar year.
- Partnership tax returns due (Form 1065): File Form 7004, to receive an automatic 6-month extension to file. Failure to file on time or file an extension will result in a $210 per month per partner penalty.
- S Corporations due (Form 1120S): File Form 7004 to receive an automatic 6-month extension to file. Failure to file on time or file an extension will result in a $210 per month per shareholder penalty.
• Electronic filing of Forms W2: File copies of all the Forms W2 you issued for 2020. This due date applies only if you electronically file.
• Electronic filing of Forms W2G: File copies of all the Forms W2G you issued for 2020. This due date applies only if you electronically file.
• Electronic filing of Forms 8027: File Forms 8027, Employer’s Annual Information Return of Tip Income and Allocated Tips for 2020. This due date applies only if you electronically file.
• Monthly NV sales tax for prior month.
Pros and consMost business owners who I work with are not passionate about filing their Partnerships and S Corporations by the filing due date of March 15.They are generally paying estimated taxes, so the real decision is if they can file their personal return by April 15.Following are some pros and cons of filing the business returns before March 15.
Reasons to file on time
- First and foremost, it is one less thing to worry about later.
- Banks and other lenders are more prone to appreciate businesses that have their returns done timely.
- Business owners know the actual results for operations more proximate to year end.
- It makes selling your business easier, since buyers have current information.
- Reduces surprises in how much the business made, and you can generally better estimate what you will owe personally on April 15.
Reasons to extend
- If it’s not due now, it’s not due. You can focus your attention on more pressing business matters.
- You can generally save a buck or two (or more) on professional fees.
- You have more time to decide if an automatic tax accounting method change is in order.
- You can postpone funding retirement account employer contributions. They can be paid as late as the extended due date of the tax return (September 15, 2021).
In conclusion, there are lots of variables that a business owner must navigate to decide if not filing an extension is worthwhile. My advice is to have a good handle of results of operations close to year end.
If you are reading this article, and you still don’t have solid financials for 2020, hire in some help. It is difficult at best to navigate your business without good financial information — it is virtually impossible if you don’t have visibility into operational results.
The above discussion is general in nature. Discuss with a CPA your specific facts to determine a proper course of action.
Michael D. Bosma, CPA, is Principal-in-Charge of Keystone CPAs and a business broker with M&A; Business Advisors in Reno. His NNBW column, “Covering Your Assets,” focuses on effective planning strategies for every business owner. Reach him for comment at firstname.lastname@example.org.