Filing S-Corp Taxes Online Guide
When forming a business, one of the most important decisions you have to make – particularly from a tax perspective – is how you’ll classify your company. For the smallest operations, this might be a sole proprietorship, but more often, the choice is between forming an LLC and a C Corp, each of which has its filing norms, tax rules, and regulations. But what about S Corp status? You won’t see this option when forming your business, and that’s because S Corp is a tax filing status, not a type of organization.
S Corp basics
While LLCs and C Corps are standard business forms with tax norms, sometimes those tax structures are not ideal. That’s when a business might choose to make an S Corp election. Making an S Corp election combines the best parts of both the LLC and C Corp taxes, like pass-through taxation, personal asset protection, and reduced self-employment tax liabilities. Unlike an LLC, though, companies with shareholders can also elect S Corp status, as long as the company is a domestic one with fewer than 100 shareholders.
Can I file an S Corp for the next tax year?
To make an S Corp election, you have to act early. S Corp elections need to be made at the beginning of the year, so file soon if you want to take advantage of this tax filing status for the next tax season. S Corp paperwork needs to be filed within 75 days of the start of the year, so businesses have a few weeks before the tax deadline. Headed into the upcoming filing season, you’ll need to file under whatever your standard classification is. There are a few circumstances when it’s considered acceptable to file for S Corp status late. Specifically, the business needs to show that they intended to file for S Corp status by the deadline and that the company met all other qualifications before the deadline. The good news is that the IRS tends to be generous in dealing with deadline issues, as long as the business comes to them within a reasonable time frame.
Making your decision
If you choose to file for S Corp status, the first step is to file IRS Form 2553. You cannot do this online. Form 2553 must either be filed by mail or fax and if you choose to fax your forms, you must keep the original paperwork. Though they may not be rigid about the election deadline, the IRS is strict about Form 2553 being filed in its original.
Filing your S Corp taxes
Unlike making your S Corp election, you can file your actual S Corp taxes online. For larger companies, it may even be required. Overall, the process is quite simple. You’ll follow most of the exact procedures for any other business tax filing to file your S Corp taxes. The most important thing is that you have a qualified tax professional. Unlike personal tax returns, filing S Corp taxes requires a degree of expertise that not all accountants will have, and it involves paperwork that they may not often file, even if they’re used to working with LLCs or C Corps. You’ll need to file several forms to complete your small business’s S Corp filing. They include the following:
Form 1120S: This form is used by domestic corporations to determine income tax liability. Your tax professional will record any income or gains, losses, deductions, and credits your business is eligible for. To ensure that your tax preparation professional can easily do this, be sure to organize all of your business's information before the preparation process begins.
Schedule K And K-1: S Corps may have multiple owners, and you’ll need to summarize shareholder content on Schedule K and then account for each of them on separate Schedule K-1 forms. Each of these forms should break down the respective owners’ net earnings. For small business owners electing S Corp status, the Schedule K-1 form is the equivalent of an individual 1099 or W-2.
Schedule B: A component of Form 1120S, Schedule B is a miscellaneous form. The details included in Schedule B are information on stock holdings in other countries and other ownership interests, receipts below a given threshold, and additional information on total assets. Your accountant will be able to use Schedule B to determine whether your company also needs to file Schedules L or M-1, which are only required of companies with assets over a given amount.
Form 940: This is the Federal Unemployment Tax Act (FUTA) form, and all corporations with employees have to submit Form 940 with their taxes. This form ensures that employers pay into the safety net for individuals who become suddenly unemployed. Employees do not pay this tax, and it should not be deducted from their income; only employers pay this tax.
Form 941: Similar to Form 940, this form accounts for quarterly income tax payments and FICA taxes. If you’ve ever filed business taxes before, you’ve likely filed both of those forms before, and your accountant will have no problem with these.
Form W-2: Though LLCs without any employees may occasionally elect S Corp status, most companies that stand to benefit from this filing status have W-2 employees. Form W-2 records payments to the workers, and you’ll issue W-2s to those workers in advance of the filing period to ensure that they can complete their taxes.
Form 1099: 1099 employees are independent contractors, and while you don’t pay taxes on these individuals, you do still have to report their work with you, in part to ensure the IRS can appropriately levy taxes on their income.
State-Based S Corp Requirements: Certain states have their own S Corp filing requirements, so consult with your business accountant about any additional paperwork you may be required to file with your state.
Filing – the technical side
As noted, you can file your S Corp taxes online, and there are several ways you can do this. You can do this online through the IRS’s free platform; you’ll be directed to the right one depending on your business’s size. You can also have your business’s tax preparation professional file your taxes online through their preferred platform. CPAs are generally well-versed in which platforms are secure and work best for business filings.
When choosing a CPA to handle your S Corp election and filings, it’s important to select a professional with the expertise to manage more complex business taxes rather than conventional individual or basic LLC filings – and that’s not always easy. That’s why you need Taxfyle.
Taxfyle differs from other tax services because we work with individual filers and accounting firms looking to diversify and manage their businesses. All you have to do is upload your documents for businesses looking for filing support, and you’ll be paired with an accountant with the appropriate skills to address all of your concerns. It’s simple, transparent, and the best way to complete even complicated returns.
Don’t let your S Corp filing reach the IRS with missing pieces or errors. Learn more about Taxfyle today and start filing early. As an owner, you already have all the information you need to get to work. A skilled accountant is out there waiting for you – it’s the match you’ve been waiting for all along.
General business tax extension info & help
Tax returns can be complicated, long, and overwhelming. This is especially the case if you're a business owner loaded with a mountain of deadlines and responsibilities. The IRS gets it, and we do too.
If you can't get all of your forms in by the required filing date, you can file for a business tax extension to buy yourself a little more time. Does this sound like a step your company might need to take this year? We've got you covered. Read on to learn all about how business tax extensions work and how to jumpstart the process today.
How does a business tax extension work?
First, we need to be clear: A business tax extension simply gives you more time to complete your tax return. You still have to pay all the income taxes and self-employment taxes you owe before the due date. Otherwise, you could risk facing late payment fines from the IRS. To avoid underpayment and late payment penalties, you'll need to pay at least 90% of the amount.
Not sure how much money your business owes? Your tax preparer can reference the estimated tax calculation worksheet on IRS Form 1040-ES to give you a rough estimate. Or, you can also check your previous year's return. Either way, make sure to factor the self-employment tax due on your business earnings into your calculation. Still, don't use this as a way to bide your time and save your dollars. The extension is simply a grace period. You can assemble needed documents, find receipts, and do any other administrative tasks necessary to file complete and accurate business tax forms. Your business can file for one extension per tax year. Even if you don't owe any money on your business taxes, you might still need to do more work on your return. If that's the case, it's best to go ahead and file for an extension anyway.
How do I File a business tax extension?
The specific IRS form you'll use to file your business tax extension will depend on the kind of business you operate. Let's take a look at two of the most common ones.
IRS Form 4868
Are you at the helm of a sole proprietorship or a single-member limited liability company (SMLLC)? If so, you're used to filing your income taxes on Form 1040, Schedule C, which includes profits from your business into your income.
To file a business tax extension, you'll need IRS Form 4868.One workaround? You don't need to file this form if you simply pay part or all of your estimated income taxes online using one of the IRS's electronic payment options. You can also pay over the phone. Electric payment options include:
Electronic Federal Tax Payment System (EFTPS)
Credit or debit card
When you make your electronic payment, the IRS will automatically process an extension on your time to file. On the other hand, if you intend to pay your estimated taxes in any other way (including by mail), you'll need to include IRS Form 4868 in your request.
IRS Form 7004
Corporations and partnerships will file for a business tax extension using IRS Form 7004. Other entities that will file this way include:
Multiple-member LLCs filing as partnerships
In most cases, the IRS will automatically approve and process your business tax extension as soon as you pay your taxes and submit Form 7004. Note that the IRS doesn't normally reject requests for business tax extensions, regardless of whether you submit IRS Form 4868 or 7004. When they do, it's often because of an error on your request form, so double-check all of the data you enter.
Extension application and return due dates
Knowing which forms to use isn't helpful unless you know when to submit them. Let's look at the deadline to submit your extension application, broken down by business type. The first date explains when your extension application is due, and the latter date reveals the deadline to submit your extended return. In most cases, the extension is set for six months. Note that the below list is based on partnerships, S corporations, and C corporations that have December 31 year-end.
Sole Proprietor/Single-Member LLC: Application due April 15/Return due October 15
Partnership/Multiple-Member LLC: Application due March 15/Return due September 15
S-Corporation Business: Application due March 15/Return due September 15
Corporation: Application due April 15/Return due October
Can I extend my state tax return?
You might also need more time to file your state tax return. In this case, you'll need to file an extension application with your state. You can check with your state tax agency or revenue department to learn more about this process. This website includes a link to every state's associated taxing agency for ease of reference.
Now that you know more about how the business tax extension process works, are you ready to file one for your organization? Doing so can help you breathe a little easier, take some stress off your shoulders and help make sure all of your information is correct.
The best part? Our professional tax preparers can take care of the entire process for you. Why spend hours filing your taxes when you could do it in a few clicks? Let's connect and take this next step together.