An S-Corp owner is responsible for many tax obligations and important deadlines on both a personal and corporate level. These new responsibilities may seem daunting and overwhelming, but, if you know your business obligations from the start you will be able to plan and budget accordingly.
Tax Filing and Tax Liability
When are S Corp Tax returns due?
S-Corporations must file Form 1120-S with the IRS each year. In addition to the 1120-S, each shareholder will receive a Schedule K-1 with their share of the profits (or losses) to declare on their own personal tax returns. The Federal Form 1120-S is due March 15th, for calendar year filers, or the 15th day of the third month for fiscal filers. Filing Form 7004 will extend the filing deadline to September 15th or for six months from the original filing deadline. Keep in mind if the S-Corporation extends the time to file, you will need to request a personal extension because you cannot file your personal taxes without the Schedule K-1.
Remember, the S-Corp does not pay taxes on its profits. The company’s income (or loss) flows through to the individual shareholder’s tax returns through Schedule K-1.
Individuals must file Federal Form 1040 each year. These taxes are due April 15th, for calendar year filers, or the 15th day of the 4th month following the close of the taxable year for fiscal filers. Filing Form 4868 grants a six-month extension with a filing deadline of October 15th, or six months after the original due date. The extension is for the filing of the tax return only and does not extend the deadline for paying any taxes due. Any tax liability must be paid by April 15th to avoid penalties and interest. To estimate this tax liability, you need to know the profits of the corporation and your own wages. We can provide this information to our Formations customers, to assist your tax preparer in calculating any estimated tax liability that will be due.
Individuals have until April 15th to deposit funds into personal retirement accounts, such as a traditional or ROTH IRA, to count towards the prior year’s contributions. The deadline to open and set up a SEP IRA is also April 15th. SIMPLE IRAs can be opened and set up on any date from January 1st to October 1st. December 31st is the deadline to open and set up a SOLO 401(k), which is one of the beneficial retirement accounts for an S-Corporation owner.
Quarterly Estimated Payments
Individual quarterly estimated payments are due on April 15th, June 15th, September 15th, and January 15th. Ideally, your payroll withholdings cover any personal tax liabilities, so estimated payments will not be necessary. You should discuss this with your customer success manager at Formations. If there appears to be a shortfall in withholdings, adjustments to the federal tax withholdings on your salary can be made, or quarterly estimated payments can be scheduled.
S-Corporation owners will be receiving payroll through the corporation, which means additional obligations for payroll taxes with corresponding deadlines. The quarterly Form 941s are due by April 30th, July 31st, October 31st, and January 31st. Tax liability deposits will be due on a semi-weekly, monthly, quarterly, or annual basis, depending on prior tax liability amounts. Semi-weekly deposits are due the following Wednesday for payments made on Wednesday, Thursday, and/or Friday, and the following Friday for payments made Saturday, Sunday, Monday, and/or Tuesday. Monthly deposits are due by the 15th day of the following month. Quarterly deposits are due on the same day as Form 941. If your filing frequency is set to annual, the payment is due by January 31st with Form 944. An annual filer would not file quarterly 941s.
The Annual Form 940 Federal Unemployment Tax Act is due by January 31st. If the FUTA tax liability is $500 or less, payment can be made with Form 940 by January 31st. If the FUTA tax liability is greater than $500 you must make at least one quarterly payment when the liability reaches the $500 threshold.
Annual W-2s must be mailed to employees by January 31st, with Form W-3 and Copy A of the W-2 sent to the Social Security Administration by the same date. Annual Form 1099-NECs must be mailed to contractors and vendors by January 31st, with Form 1096 and Copy A being postmarked by January 31st to the IRS. Form 1099-MISC must be mailed to recipients by January 31st and Form 1096 and Copy A must be sent to the IRS by March 1st, if mailing, or by March 31st if filing electronically.
State Obligations and Deadlines
You must also be aware of any state obligations and deadlines. Most states require unemployment insurance, state payroll tax withholdings, and/or worker’s compensation coverage. Generally, these payments and reports are due quarterly, although some states may require withholding taxes to be paid semi-weekly or monthly, depending on the amount of the overall tax liability.
And odds are you operate your business in a state with sales and use taxes, since only Alaska, Delaware, Montana, Oregon, and New Hampshire do not impose a retail sales tax. The filing deadline for remitting collected sales taxes varies by state and is generally determined by the number of prior tax liabilities. The filing frequency may be semi-weekly, monthly, quarterly, or annually, so be aware of these additional deadlines and tax obligations.
Corporate Annual Report and License Renewal
You also need to remember to file your corporate annual report with the state where you operate, if required, and to renew any city, county, or state business licenses before they expire. License renewals and annual reports are generally due once a year, on the anniversary date of formation, or another date predetermined by the organization or agency.
The dates that have been provided are the established due dates. If the established due date falls on a weekend or holiday, then the next business day becomes the due date. For example, if a filing deadline of January 31st falls on a Saturday, the report or payment would then be due on Monday, February 2nd. A mailed-in payment or report is filed on time if it is postmarked to the correct address by the established due date.
This is a lot of information to take in and it can seem overwhelming. Remember, Formations is here to help make taxes easy for you and ensure everything is filed and paid on time.