Running a business is not a joke. You must remember some critical days in the calendar. One of the important dates is the tax deadline by the IRS. Missing a deadline can be one of the grave mistakes for your business. Your business can be charged with fines and penalties that it can’t recover, and if it recovers, it can take a lot of time.
So, the best thing you can do to avoid missing any payment and facing such consequences is to stay updated with those tax deadlines released by the IRS.
The IRS fixes taxes differently depending on several factors. The main one is the business structure. Is your business a sole proprietor, partnership, corporation, or S corporation? Other factors to be considered include: if you have employees or you contract from outside, among others.
That said, here is the list of the essential tax deadlines for your business.
Income tax Deadline
All types of businesses must file income taxes every year except for partnerships. Rather than paying income tax, partnerships file an annual information report because the profits and losses made are shared among the partners. Each partner then does his personal tax returns.
Both state (those eligible to pay income tax) and federal income taxes were supposed to file their taxes on 15th April of every year unless that day falls on a holiday or weekend where they’re moved on the following Monday. For partnership and S corporation, the deadline was due 16th March 2020.
However, due to the Covid-19 pandemic, the government has pushed those dates up to 15th July 2020.
If you operate a business with employees, you must ensure that you withhold and deposit taxes to them and then file a report based on that information. The law enforces any employer to pay Federal Unemployment (FUTA) taxes from the profits he has made.
When it comes to Medicare and Social security, you must withhold the paychecks of your employee and then contribute some amount to each of your employees. Lastly, you must withhold state and federal income taxes from your employees’ wages and ensure you deposit them.
On the other hand, if you work with employees from an independent contractor, you don’t have to withhold and pay taxes for him or her. However, you must file a 1099 form if you spend more than $600 for any contractor in that year.
Every quarter of the year(31st January, 30th April, 31st July, and 31st October), all the employment forms must be filed. Again, they’re also due on 28th February and 31st March.
Medicare and Social Security tax deposits must be made semi-weekly or monthly. This variation occurs depending on different tax liabilities. Therefore, determine your tax liability first and then make the necessary payments. To be on the safe side, you should monitor your deposit schedule early enough (before the beginning of the new calendar year).
You must deposit your FUTA tax by the last day before the end of the quarter. If the deadline falls on a weekend or holiday, the IRS allows you to wait until the next business day, which is on a weekday.
Due to the Corona pandemic, the government has pushed the deadline until 15th July 2020.
Sole proprietors, partners, and corporation shareholders are entitled to pay an estimated tax payment for them to owe federal income taxes $1000 or more for that year.On the contrary, corporations are allowed to estimated tax payments for them to owe federal income taxes $500 or more for that year.
The due dates for estimated taxes for corporations include:
- 15th July 2020 for the first quarter
- 15th June 2020 for the second quarter
- 15th September 2020 the third quarter
- 15th December for the last quarter
Before these new deadlines, every business pays estimated tax each quarter:31st January, 30th April, 31st July, and 31st October. These payments are not just restricted to be paid in each quarter. You can start reducing the amount on daily, weekly, bi-weekly, monthly or any time so long as you’ll have cleared your tax before the time expires.The introduction of the Electronic Federal Tax Payment System (EFTPS) has eased the “pay as you go” payment.
Not every business should pay this kind of tax. It’s only applicable to businesses such as retailers, manufacturers, and trucking companies. These industries are faced with different industry-specific requirements. Depending on the requirements it falls, these taxes are paid annually, quarterly or monthly.
If you’re self-employed, you aren’t exempted from taxes. You must deposit taxes to cover Medicare and Social security benefits for yourself.If you want to owe the Federal income tax $1000, you should clear your self-employment taxes by paying estimated taxes (the one we’ve discussed above).
When you stay ahead of the tax deadline, you save your money, time and reduce the stress of the last-minute rush. Now that you have the list of the most important tax deadlines, you can now celebrate because you’ve survived the IRS sword.
You may also be interested in reading Tax Dead Lines and Dates You Have to Memorize