Small businesses need to stay abreast of these new cutoffs to keep their companies in the loop compliance-wise.
Death and taxes are the only two guarantees in life. But new filing deadlines, which generally take effect for the 2016 tax year and thereafter, will certainly sway how the latter influences small businesses going forward.
Efficiency is a major catalyst for moving many of the existing deadlines. Partnerships and S corporations are known as “flow-through” entities, meaning any due date changes for these commodities gives individual owners time to plug that filing information into their April 15 income tax returns.
On the flip side, C corporations have no tie-in to an owner’s individual tax return, so the deadline has been pushed out another month. Small businesses need to stay abreast of these new cutoffs — as well as the pertinent details that go along with them — to keep their companies in the loop compliance-wise.
Mark your calendars
Get ready to see a noticeable shift in your business’s tax filing schedule. The following date changes are among the most common for calendar-year small businesses and startups:
- C corps: This is the biggest change for early-stage startups, which are typically Delaware C corps. Small businesses can now file a month later, meaning their new due date is April 15.
- Partnerships: Partnerships now must file their Form 1065 a month earlier by March 15.
- S corps: The filing deadline remains the same at March 15.
- FBAR: If your business has a foreign bank account, pay particular attention to this new deadline; the previous due date of June 30 has been changed to April 15.
Deadlines for allowable extensions will also look a bit different. Every business files an extension at one point or another, but it’s vital for founders to understand which one applies to their respective tax situation. Note that calendar-year C corps, partnerships, and S-corps can file for an extension of time to file until September 15.
We normally don’t see many early-stage companies that transition from a calendar year to a fiscal year. But the IRS does allow C corps to adopt the fiscal calendar as long as they meet the requirements to move off of a calendar year.
All of the dates listed here are based on a standard calendar year that begins January 1. For companies on a fiscal calendar, it’s important to shift these altered deadlines to align with the first day of that year.
How to ready yourself
So what do you need to be thinking about now so you have everything in order come tax season? Here are four items you should discuss with your tax pro:
- Figure out how your company will be affected. Your staff accountant should consider the following questions for your company: Did you file as a corporation in this calendar year? If not, when? Conversely, if your business ceased operations, when was it dissolved? Is your company on cash-based or accrual-based accounting? Will the company be profitable this tax year? Just 6 percent of the file under corporate tax regulations, so it's important to have an upfront conversation with your tax accountant on whether those codes apply to you. It goes a long way toward preventing headaches — and unnecessary tax penalties — down the road.
- See how you’ll be affected at a state level. All of these changes are at the federal level. Your tax deadlines in the state — and possibly city — realm are not directly affected by this regulation. If you’re not sure what your state or city tax liabilities are, speak with an accountant as soon as possible.
- Rest easy regarding more shifts. Usually, the only changes that come to tax deadlines, both business and personal, are due to deadlines falling on a weekend or federal holiday — and even then, the date shifts only a day or two. Seventy percent of respondents to a Thomson Reuters survey expect even more regulatory information to publish within the next year, despite the deadline changes above taking a literal act of Congress to put into place. There are no other big changes on the horizon, but rest assured that you will know about it when it happens.
- Mind your extensions. The new law, of course, allows for extensions when needed. If you think you will need to file one, speak with your tax professional before the first deadline has passed so the proper paperwork can be filed with the IRS. Again, all of these deadline shifts were put into place to make the tax-filing process for business owners an easier one. Don’t let the new deadlines cause you to miss filing an extension. We always see companies that have forgotten or ignored their taxes because they “don’t have the time” or they’ll “do it later.”
As with most cases in life, the IRS will not take “I didn’t know” as an excuse. Stay on top of your filings to avoid penalties, interest, and additional fees. The tedium of filing your taxes isn’t going anywhere anytime soon; in fact, it’ll be coming sooner than expected for the small businesses affected by these new deadlines.
What’s important is knowing about these changes and managing your tax compliance reporting accordingly.
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