When Are Llc Taxes Due 2021

Whats The Penalty For A Late Tax Payment

Generally youll have to pay 0.5% of your unpaid tax amount each month past due up to 25% of your total tax bill. Failing to pay your taxes will incur an outstanding tax bill, which will eat away at any future tax returns and could require a levy or repossession of your property to pay your balance. Jail time is also a consequence of failing to pay or tax evasion.

Important Due Dates For Filing Your 2020 Tax Return And Making Payments

The Balance / Catherine Song

The Internal Revenue Service typically begins processing tax returns in late January, but the first day to file 2020 tax returns was pushed back to February 12, 2021 because of pandemic-related issues.

The deadline for filing a personal 2020 income tax return was extended to May 17, 2021. This also extends the deadline for any money owed without incurring a late fee or interest penalties. It does not affect estimated quarterly tax payments that are due on April 15, 2021, for business owners and those who file as independent workers.

Dont Miss This Quarterly Tax Payment Deadline

• Third-quarter estimated tax payments are due on Sept. 15 for income from self-employment, small businesses, gig economy work, investments and more.
• Filers with an adjusted gross income below $150,000 may avoid penalties by paying 90% of taxes for 2021 or 100% of 2020 levies.
• Victims of Hurricane Ida may postpone Septembers quarterly payments until Jan. 3, according to the IRS.

There’s an important deadline approaching for the self-employed, small business owners, gig economy workers, investors and other filers on Sept. 15.

Because income taxes are pay-as-you-go, filers without withholdings must make estimated payments four times every year, and Sept. 15 is the last call for the third quarter.

Someone with an adjusted gross income below $150,000 may avoid penalties by handing over at least 90% of their 2021 taxes or 100% of 2020 levies by each quarterly deadline, including Sept. 15, 2021, and Jan. 18, 2022.

“This, of course, is merely an estimate as the year is still ongoing,” said Thomas Scanlon, certified financial planner and certified public accountant at Raymond James in Manchester, Connecticut.

The pandemic negatively affected millions of Americans’ livelihoods in 2020, so it’s possible paying 100% of last year’s taxes won’t be enough to cover liability for 2021.

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However, if someone can’t afford to make quarterly tax payments, they still will owe the balance at tax time.

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How A Single Member Llc Is Taxed

1. Pass-through Taxation

Now because SMLLC can be classified as a disguised entity, the responsibility for paying income taxes is passed through to the owner.

This way of taxing profits is known called pass-through taxation which then references LLCs as pass-through entities.

The primary business taxes you will pay are federal income taxes and self-employment taxes.

To report and pay federal income taxes on your single member LLC business, you will need to complete a Schedule C, which is a profit or loss business form.

This is attached to your personal federal tax return that you file with the IRS.

Schedule C will report all your business transactions such as income, expenses, assets, and profits.

Thats why its critical as a business owner that you are keeping track of your transactions throughout the year, in preparation for the tax season.

Heres an example that will help make single member LLC taxes clear.

Lets say that Mary has an SMLLC for her part-time, home-based bakery business.

Last year, she earned a total of $40,000 from the business and had expenses totaling $10,000 for supplies, equipment, and other items.

She also earned $25,000 from her part-time job as a consultant. Mary will use Schedule C to show her income and expenses on her home bakery business.

She attaches Schedule C to her personal tax return, where she will report and pay taxes on her combined net income of $55,000 .

Heres an example

Joe knows hell need $40,000 next year to buy more inventory.

Requirements For Federal Excise Tax

Pay special attention to which types of excise tax forms you may be required to file.

• File Form 720 if you are required to pay quarterly Federal excise tax returns
• File Form 11-C if you need to file for wagering income
• File Form 2290 if your business uses heavy highway vehicles

Furthermore, you must file these forms each quarter of the calendar year, with due dates as follows:

• for first quarter
• for second quarter
• for third quarter
• for fourth quarter of the previous year

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Sole Proprietorship Tax Dates

If you are the only owner of your LLC, it is considered a “disregarded entity” by the Internal Revenue Service . Basically, this means the IRS ignores the fact that you’ve set up the LLC and instead taxes you as an individual. All of the income and expenses from your LLC are reported on your personal tax return, which is due on April 15. File U.S. Individual Income Tax Return along with payments you owe. You do not need to file any separate paperwork for the LLC itself.

Filing your LLC taxes is important but relatively easy if you follow the correct steps and meet all the necessary deadlines. Not filing taxes promptly could put your company in noncompliance, so make sure you note when your forms and payments are due.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.

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What Doesnt The Tax Deadline Extension Apply To

Remember that the federal governments May 17 income tax deadline extension only applies to your federal taxes. Most states have left their normal tax deadlines in place, but five states have later tax filing deadlines.

Find your state governments tax agency website on the Federation of Tax Administrators list to learn more.

If you need even more time to complete your 2020 federal returns you can request an extension to Oct. 15 by filing Form 4868 through your tax professional, tax software or using the Free File link on IRS.gov. Filing Form 4868 gives taxpayers until Oct. 15 to file their 2021 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

If you mail in your return, it must be postmarked May 17 or sooner. Heres a tax refund schedule to give you an idea when to expect your refund after youve filed. If you cannot file your tax return by the deadline, you need to file for a tax extension by May 17, 2021.

Its also important to note that the income tax refund schedule remains unchanged. This serves as an incentive for people to still file sooner rather than later.

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Single Member Tax Id Numbers

As a sole owner of an LLC, you will want an employer ID number, even if the business has no employees.

Most banks require an employer ID number, also known as an EIN, to open a business bank account.

Other clients or vendors may also require your EIN to report their income or expenses from your company.

Getting your EIN is easy. All you need to do is go to IRS website, complete an online application and you will be emailed your EIN.

Llc Tax Filing Deadline

LLCs are company structures that provide various financial and legal benefits for their owners.

If you choose to treat your LLC as a corporation, your tax dates are:

• overall tax due date if you follow the calendar year for your fiscal year

• 15th day of the fourth month after your fiscal year ends: overall tax due date if you have a different fiscal year

If you choose to run your LLC as a sole proprietorship:

The IRS taxes you like an individual. Your income and expenses are therefore reported on your personal tax return.

This is usually due on April 15 of each year, but has been extended to May 17 for 2021. File Form 1040, and youll be good to go.

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A California Llc Can Now Legally Avoid The $800 Annual Franchise Tax

California Assembly Bill 85 was signed into law by the governor on June 29th, 2020.

While California Assembly Bill 85 affects multiple aspects of the state budget, were focusing on how it affects people forming an LLC in California.

California Assembly Bill 85 changed Section 17935, Section 17941, and Section 17948 of the California Revenue and Taxation Code.

There is now some financial relief for the 1st year for people forming an LLC in California.

Can I Get A Tax Extension

Yes, businesses needing more time to complete their annual filing may request an extension with the IRS. While not guaranteed, the extension request gives you a 5-6 month extension if approved. Sole proprietors and single member LLCs file Form 4868 and other business types file a Form 7004. S-corporations and partnerships must complete their returns by September 15 and sole proprietorships, LLCs, and C-corporations have until October 15.

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When Are Estimated Taxes Due

The tax-filing deadline extension does not apply to those filing estimated taxes, according to the IRS.

Those who pay estimated taxes have a slightly different schedule from others. People who pay quarterly estimated taxes include workers who are self-employed, earn money from tips, or any similar entrepreneurial or independent contractor jobs. If your paycheck doesnt have taxes taken out before the money gets to you, then you should be paying estimated taxes quarterly.

Estimated taxes are due quarterly with Form 1040-ES, and there are two sets of dates. If youre self-employed or a farmer or fisherman:

• First quarter payments are due April 15
• Second quarter payments are due June 15
• Third quarter payments are due Sept. 15
• Fourth quarter payments are due Jan. 15

If youre an employee who earns tips, youll be paying monthly instead of quarterly:

Tax Deductions For Independent Contractors

As an independent contractor, you can deduct reasonable and necessary expenses related to running your business. Tax deductions reduce net income, lowering your business tax bill.

At your disposal are the same deductions available to any small business. You can scan our guide to small business tax deductions for a more comprehensive list of deductible expenses, but here are a few call-outs for independent contractors.

• Home office deduction: Independent contractors who use a portion of their home for work and no other purpose can deduct either $5 per square foot, up to 300 square feet, or the actual expenses of their home office. Dont try to claim your kitchen table or an office you use for your full-time, non-contract job the IRS doesnt look kindly on that.
• Self-employment taxes: Employees pay one-half of Federal Insurance Contribution Act taxes, and their employer picks up the other half. Independent contractors must pay 15.3% of eligible earnings to FICA, but they can deduct the half employers typically pay.

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Business Tax Filing Extensions

Companies can file a six-month extension by submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns. As long as Form 7004 is filed in a timely manner, the six-month extension will be granted.

In some cases, an additional extension beyond the six-month extension is filed. An explanation is required by the six-month due date. There are no further extensions granted beyond the second extension. The result is an untimely filed return, and penalties accrue based upon an outstanding balance. Generally, no penalty is due as long as the tax return is filed.

Walkthrough Of Estimated Tax

The first thing to know: your business income is considered earned income and passes through, from your LLC to your personal taxes. What you need to know about earned income is that its exposed to higher tax rates. Pass through simply means your LLC doesnt affect how much you’re taxed, at least not by default .

How Does an LLC Get Taxed?

Theres one simple idea that will put you ahead of nearly all small business owners, in your tax knowledge. Your income is taxed twice. You read that right: you first pay Self-Employment taxes and pay again via income taxes. You might be surprised to learn Self Employment taxes are almost always more important.

Self Employment Taxes

Round one of your taxes is made up of Social Security and Medicare or an estimated 15%. Most people fixate on income taxation because of the higher rates, but they are missing the big picture. Because Self-Employment taxes are the first round of taxes they often are the larger amount you pay!

Take this example:

Your business earns $100k in revenue and has $50k in business expenses, thats a $50k profit on your form Schedule C. Youre guaranteed only one deduction here, effectively making your Self-Employment tax 14.13% or $7,065.

Compare this to income taxation for this person at $5,235 . That means even though weve heavily exaggerated things still they’ve paid far more into Self-Employment!

Income Taxes

How Much Should an LLC Set Aside For Taxes?

Your Effective Tax Rate

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Business Tax Return Due Dates Of 2021

Find the list of various types of business entities and their related tax return deadline for the year 2021.

Sole ProprietorshipSole proprietorship kind of business is an extension of the individual to run the business, hence the year-end of this business entity is 31st December, and the tax return deadline is similar to the individuals, which is on 15th April 2021. This business file the income tax return on Schedule C, which comes as a part of a group of forms and schedules which go along with the individuals personal tax return.

Single-member LLCSingle-member LLC is taxed similar to that of a sole proprietorship using Schedule-C to evaluate the net income, hence the tax is due and the taxes must be payable on 15th April for the previous year. The deadline for the year Schedule C forms, with the owners personal tax return, falls on 15th April 2021.

PartnershipThe partnership tax return is reported as an information return through Form 1065 and the tax is owed on the individual partner tax return. Form 1065 is due on the 15th day of the 3rd month after the end of the tax year of the partnership.

LLCLLC is taxed as like that of partnership, so the partnership tax filing and the payment rules also applicable that includes the deadline 15th March 2021 Schedule K1. If your form is ending on March 30, as in the example above, July 15 is the deadline.

Whats The Deadline To Pay Your Taxes

If youâre sending your return in via snail mail, the IRS considers your return âon timeâ if itâs addressed correctly, has enough postage, and is in the mail before the end of business on your filing deadline.

Otherwise, you can e-file your return before midnight on your tax filing deadline day.

If youâre self-employed, your business probably pays taxes in four sums throughout the year, rather than on one day. These are called estimated tax payments. The due date for these 2021 payments are April 15, June 15, September 15, and January 15 .

If youâd rather have someone else handle your bookkeeping and federal income tax filing, check out Bench.

Weâll set you up with a dedicated team of bookkeepers and a tax team to provide year round tax advice and file your taxes for you. With these teams, youâll have a tax planning session to ensure you are more prepared for next year. Weâll take both headachesâbookkeeping and taxesâoff your hands, for good.

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Quarterly Vs Annual Payments

Wondering if your business should pay taxes quarterly or annually? If your business has employees, youll need to file Form 941 every three months. You will also need to pay a quarterly tax if your business sells specified goods, like gasoline or alcohol, that require an excise sales tax.

If your business doesnt fall under those categories, figure on paying at the usual tax time. But if youre worried about having a large sum of cash on hand to make a lump-sum annual payment, consider paying quarterly instead. Additionally, freelancers are required to pay estimated quarterly taxes and to file an end-of year tax return.

All quarterly tax payments should be made on the following schedule:

Financial Institution And Insurance Company

Overview

These are due dates for calendar year filers. Fiscal year filers must determine due dates based upon tax period end date. Extension and estimated payment due date information is included below.

Due on or before April 15, 2021

Form 63FI:

• File a 2020 calendar year return and pay any tax due. If requesting time to file a return please ensure to deposit what you estimate you owe in tax as your extension payment.

Form 63-20P:

• File a 2020 calendar year return and pay any tax due. If requesting time to file a return please ensure to deposit what you estimate you owe in tax as your extension payment.

Form 63-23P:

• File a 2020 calendar year return and pay any tax due. If requesting time to file a return please ensure to deposit what you estimate you owe in tax as your extension payment.

Form 121A:

• File a 2020 calendar year return and pay any tax due. If requesting time to file a return please ensure to deposit what you estimate you owe in tax as your extension payment.

Due on or before May 17, 2021

Form 63-29A:

• File a 2020 calendar year return and pay any tax due. If requesting time to file a return please ensure to deposit what you estimate you owe in tax as your extension payment.

• Motor Fuel Excise

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