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Business Tax: What You Need to Know for the Upcoming Year
2024 could become the best time to take the leap to become an S Corp, and we want to help you be successful!
If you’re contemplating an S Corp election this year, we’ll be discussing the deadlines for making the election.
It’s also important to understand what options are available if you missed the election deadline but still want to proceed as an S Corp for the current year (yes, it IS still possible!)
If you’re uncertain about choosing to become an S Corp, I recommend reviewing my previous blogs about S corps.
I’ve covered various topics such as calculating potential tax savings and determining reasonable compensation.
It’s important to go through these procedures before making the election!
To become an S Corp for the current year, LLCs must file Form 2553 in the first two months and 15 days of the year OR within the first two months and 15 days of LLC formation.
(See my article on S corps vs LLCs!)
Before filing to elect S Corp taxation, LLC status is a prerequisite.
Ensure that the information you provide on Form 2553 is accurate and aligns with your LLC documents.
Enter the correct EIN, business formation date, and business name to avoid issues leading to disapproval of your S Corp election.
Typically, the election should be made by March 15th to make it retroactive to January 1st of the current year (assuming you operate on a calendar year basis, as most small businesses do).
Alternatively, if you are a new LLC, you can file within the first 2 months and 15 days of your existence and backdate to when you began the LLC.
(By the way, do you have your books in order? Find out why I recommend Quickbooks Online over Quickbooks Self-Employed!)
Upcoming Tax Filing Deadlines You Shouldn’t Miss
Staying up-to-date with tax filing deadlines is crucial for individuals and businesses alike to avoid penalties and interest charges.
Here are some important upcoming tax filing deadlines relevant for S Corps you should keep in mind (note these deadlines are moved to the next business day if they fall on a weekend or holiday):
- March 15: S corporation election deadline for new S Corps
- March 15: For those who were S Corps the previous year, your prior year 1120s filing is due (Corporate tax return). No tax payment is made at this time.
- April 15th: Individual income tax return due (1040). This is when tax payments are made. This is also the deadline for tax payments for the first quarter.
- June 15th: Estimated tax payments due for the second quarter of the year.
- September 15th: This deadline is for partnerships and S Corporations that filed an extension. It’s also the due date for estimated tax payments for the third quarter.
- October 15th: If you filed an extension for your personal income tax returns, this is the final deadline to submit it. However, keep in mind that any taxes owed are still due by your individual income tax deadline.
- January 15th: Due date for estimated tax payments for the fourth quarter.
Miss your deadline to elect S Corp, but know you want to do it this year?
It is best to aim for a full-year S Corp status that aligns with your fiscal year, typically starting on January 1st.
Late elections up to three years past may be possible in some cases. However, its most common to do a late election and back-date to the first of the current year (i.e. making an election in June that back-dates to Jan 1).
Late elections for S Corp status are possible by filing Form 2553 with a reasonable cause for missing the deadline.
The reasonable cause can be varied, such as not recognizing the deadline or assuming that it was already filed.
Providing additional information in section I of the form can justify the late election.
It is still possible to make this election even after the March 15th deadline has passed.
For more details on filing Form 2553 yourself, including a late election, see the resources in our S Corp Toolbox.
Fiscal years vs. calendar year income tax return
Most businesses default to operating on a calendar year basis, meaning the beginning and end of their business year matches the calendar year (Jan 1 – Dec 31).
However, some businesses may opt to operate on an alternate fiscal calendar. If this is the case for your business, you are likely already aware of this.
In that case, the easiest route is to file Form 2553 by two months and fifteen days after your fiscal year-end concludes.
Generally speaking though, most businesses opt for running their accounts by calendar year standards; accordingly be aware of this when designing yours!
When starting out, business owners may be tempted to quickly declare their entity as an S Corporation.
However, it’s advisable to take a step back and evaluate your long-term plans before doing so.
For many small businesses, electing S Corp immediately upon starting your business won’t be beneficial.
Stay on top of the many S corp tax filing deadlines
For ease, you may wish to start operating as an S Corp prior to receiving final approval from the IRS.
It’s important to recognize that in doing so there are several deadlines that must be heeded – most notably a March 15th due date for filing Form 1120S.
Though comparable with LLCs, such organizations require a separate set of tax documents and filings throughout the year.
Filing Form 1120S for your S Corp is required to report the profits and losses of your business, but no taxes are due at the time of filing.
The 1120s will generate what is known as a K-1 for all S Corp owners which will show their share of the S Corp profit that they will need to report on their individual income tax return.
However, if additional information or documents are needed, then chances of securing an extension until September is possible—though don’t forget that your individual taxes must also have their own separate deadline extended as well.
For more information, see this walkthrough video on how to file a free tax extension for your 1120s.
Common business tax filing deadline changes
From time to time, these deadlines will move based on what days they fall.
Typically, a weekend is not going to be a deadline for tax filing.
It’s going to be the next business day that is not a holiday after that weekend.
So sometimes you get a little bit of flex there and occasionally the IRS might move some deadlines kind of like they did when we had the COVID-19 pandemic and they moved some of those deadlines.
With tax deadlines looming, it’s essential for S Corps to remember the March 15th and April 15th timelines.
Get the extra help you need with S corp tax deadlines
If you’re thinking about taking the plunge and starting an S Corp, I invite you to check out my FREE success checklist to start an S Corp.
It could make a world of difference in setting up your business for long-term growth!
Ready to get started with your S Corp?
Explore our S Corp Toolbox which can help you make the election yourself for free and get set up properly!
Time well spent on this important endeavor – good luck!
Frequently Asked Questions about business income tax payments and tax filing season
What is the tax deadline for S Corp 2024?
The deadline for your 1120s is March 15th.
Is there a deadline to file for an S Corp?
Filing for an S Corp is subject to deadlines that should be taken into consideration.
Established businesses have until March 15th, while new businesses have until 2 months and 15 days from when they were formed.
Knowing and adhering to these timelines can help ensure your S Corp election is accepted!
Can I still elect S Corp status for 2024?
Yes, you can still elect S Corp status for 2024, even after March 15th. To do so, you must file Form 2553 and make a late election and ask for it to be backdated to Jan 1. You’ll need to give a specific reason for the late election, but the IRS is generally not overly picky here.
Is the tax deadline extended for 2024?
As of the writing of this article, there have been no tax deadline extensions for 2024, nor are there any expected extensions.
You can file for a tax extension that will extend the filing deadline for 6 months, though it doesn’t extend the time to pay taxes.
With the 2024 tax deadline quickly approaching, now is a great time to stay informed about any potential changes or extensions.
Keeping up with IRS news and consulting a qualified professional are both smart ways to make sure you’re meeting requirements and avoiding penalties before it’s too late!
Read more about how I recommend calculating whether or not to become an S Corp. ⬇️
S Corp Deadlines Video Transcript
This transcript is machine-generated and has not been edited for errors:
Hi everyone. Jamie Trull here, your favorite CPA and financial literacy coach and today we’re gonna be continuing talking about S Corp. So for the last several weeks on this channel, I’ve had a lot of content around S corporations and that’s because we’re kind of sitting at that time of year where this might be on people’s minds. So this video is for you if you are considering becoming an S Corp.
S Corp Tax Deadline Information For 2024
If you are considering making an S Corp election this year. We’re gonna talk specifically about the deadlines to make the S Corp election and what you can do if you accidentally miss the deadline, but you still want to be an S Corp for the current year. I’m recording this in 2024, but this is true for future years as well. So if you’re watching this in 2024 or beyond,
this is still for you. Now if you’re not sure if you wanna become an S Corp, go at some of my previous videos on this channel. There are lots of things that I’ve talked about when it comes to how to calculate potential tax savings, and how to understand what your reasonable compensation should be. You wanna go through that process before you actually get to the point of making the election.
Do you want to become an s corp this year?
But if you know that you want to become an S Corp for this year, then I’m gonna walk you through some of those important things to know about the deadline. Now, if you’re a brand new company, then you want to be electing this within the first two months and 15 days of becoming a company. Now, importantly, before you go and elect S Corp,
you are going to go ahead and need to become an LLC if you are not one already. Now, this video is specifically speaking towards those who are LLCs that wanna become S Corp. I’m not gonna get into C Corp that wants to elect to be taxed as an S Corp, that’s also a possibility, but typically I’m usually talking to my small businesses that know that now is the time for them to become an escort because it can save them money on payroll taxes.
So if that’s you, what you are gonna want to do is fill out form 2553. Again, you have to already have your LLC to be able to do this, and sometimes when you actually go to create your LLC, you might be able to file the form at the same time depending on how you’re actually doing it, but it’s really an easy form to file by yourself as well.
Considerations for filling out your S corp tax forms
The only things that you need to make sure of are that you are actually filling this out accurately and that it aligns with your LLC documents. So you want to put the correct EIN there.
As well as the correct business formation date of your LLC. Also, include your correct business name.
Those things can arise as an issue. You may not receive approval for your S Corp election.
Possibly because of some of the ways that you entered it and you didn’t enter it exactly how it shows up on those LLC documents.
And on your E I n. So here is Form 2553. As I said, you’re just gonna put your information about your entity on here.
Then determine what date you are electing S Corp. In general, that’s usually gonna be the first day of the year you’re in.
Electing an S-Corp for past years?
Now, in some cases, you may be able to go and do a late election for up to three years past,
but in this case, most of the time it’s gonna be in the current year. And the easiest way to do this is to be able to make this election by March 15th. That is technically the deadline for electing S Corp if you want it to be retroactive back to January 1st of the given year. Now, you do wanna be an S Corp for a full year.
You don’t want to be an S Corp, you don’t want that to start in the middle of the year. You always want to start at a new year, especially, if you want it to align with your fiscal year. Most people use a calendar year. So for most businesses, that means starting being an S Corp as of January 1st. So if you’re making this election,
let’s say in March, maybe it’s March 10th, let’s say of 2024, then for the date you want it to be effective as of that would be January 1st, 2024.
Considerations for filing taxes late
Now, if you miss that March 15th deadline and you do not file this form 2553 by then, maybe you’re watching this video in April or May and realizing, oh no, I wanted to be an S Corp this year.
I didn’t realize that I needed to file this form. You can still file it and you file a late election. So a late election is something that you can do, but you are gonna have to provide a little bit more information and that’s gonna go into this section I on your form 2553.
So basically you’re gonna say, yes, I am filing late. I declare a reasonable cause for this late filing.
Now, what qualifies as a reasonable cause?
Really there’s a good amount of latitude here. So you can even say something like, I meant to file this. I didn’t recognize that there was a deadline, or I thought my accountant had filed it.
Or maybe there was a death in your family and you missed the deadline.
Whatever it is, right? If you have functioned as an S corporation and you thought filing occurred, perhaps there are many things that you could put in here. And justify why you didn’t elect by March 15th.
So if it is after that point, don’t let that scare you away. You don’t have to say, oh, well I guess I missed a deadline. I gotta wait till next year.
If being an S Corp is right for you, you still can attempt to make this election.
You’re just gonna have to put a little bit more information in. But obviously, it’s the most straightforward. Do this by March 15th and you’ll have the best bet of the IRS if you file by March 15th.
Now, important to say that if you don’t run on a calendar year if you have a different fiscal year, now you would know that if that’s the case for you, then instead of it being March 15th, it’s going to be two months and 15 days after the end of your specific fiscal year.
So that’s just an important caveat for anybody who is not running their business on a typical calendar year, which if you aren’t sure, then you are running it on a calendar year. Now, one additional caveat I think is important to make here is if you are a brand new business and you want to go ahead and elect S Corp, which I don’t always recommend,
cuz sometimes it’s good to just get your feet under you for that first year in business before deciding whether or not S, Corp Corp makes sense for you. But if you know that it will, then you’re gonna wanna make that election within two months and 15 days of your formation. So that’s typically going to be your L L C formation. If you file that form within two months and 15 days of that formation, then your first year in business is going to be filed as an S corporation.
Now I will warn you, it can take a little bit of time for the IRS to get back to you.
So oftentimes it can make sense to just go ahead and be operating as an S Corp, especially if you know that you filed that form correctly and put all the correct information on it as far as your business name and your E I n,
then you can usually just start functioning as an S corporation. You don’t have to wait to get that election back cuz it can take several months and it can sometimes be better to go ahead and get yourself on the owner payroll and get all of that up and running so that it is ready to go. Now importantly, there are some other deadlines as an S Corp that you wanna be aware of, the biggest one being the tax deadline for an S Corp.
Now, as an S corporation, it’s gonna be different than when you were an LLC or a sole proprietor.
You are going to have an extra tax filing you want to be aware of because it will sneak up on you. So March 15th of the following year. So if you become an S Corp for the year 2024, let’s say.
Then you’re gonna be filing your first 1120 s, which is the corporate tax filing for it S Corp. That will need filing by March 15th of the next year. So in 2025, you will file that by March 15th, and you won’t pay any taxes at that time. It is a pass-through entity just like an LLC. But you do have a separate tax filing for your S Corp specifically.
That tax filing is then gonna help you generate your K one s from your business, which essentially is kind of, you know, your share of the profit that you are going to then claim when you do your 10 40, your regular individual income tax by April 15th. Now, there are again, ways to get this extended. You can extend an 1120 S until September,
but then you’re probably also going to need to extend your regular 1040 until October if you do that. So that’s why it’s important that the 1120S comes first because you have to use what the 1120 s generates for filing your individual income tax return. Do it in that order.
Then you can file your taxes appropriately and pay the right amount.
Now from time to time, these tax deadlines will move based on what days they fall on.
Typically, a weekend is not going to be a deadline for tax filing. It’s going to be the next business day that is not a holiday after that weekend. So sometimes you get a little bit of flex there and occasionally the IRS might move some deadlines kind of like they did when we had the COVID-19 pandemic where they moved some of those deadlines.
But that’s pretty rare and I would not expect that to be the case. So you just wanna have it penciled into your mind that March 15th and April 15th are going to be those tax filing deadlines, and that’s true for 2023, 2024, and beyond. Now if you are looking for how to make this election, this is something that you can do by yourself. You don’t have to pay Affirm to do this.
Instead, you can send Inform 2553 yourself. You do have to actually send it in in a stamped envelope. There is no way currently as of the recording of this video in 2023 to e-file this cofi, but you will be able to do that on your own if you want to. Now, if you are highly considering electing S Corp, I very much recommend grabbing my absolutely free S Corp success checklist.
You can snag that by going to jamietrull.com/scorpchecklist or clicking the button that’s on your screen right now. I hope this was helpful for you. Go check out all my other resources, on being an S corporation here, and I’ll see you next time.
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