To apply for a tax extension for your business, first estimate how much money, if any, you will owe the IRS, and then send payment for that amount along with a form requesting an extension, says the IRS website. Most businesses will qualify for a five- or six-month extension.Continue Reading
If the business is structured as a sole proprietor, the business owner should file for an extension as an individual using Form 4868. Individuals are eligible for extensions of six months. Other small businesses should use Form 7004, and are eligible for extensions of five months. In either case, the extension is automatic, and business owners do not need to specify a reason for the extension, reports the Washington Post.
Because businesses must pay the estimated amount owed in order to receive the extension, requesting an extension is not a way to defer tax bills to a more convenient time. Instead, says the IRS, an extension can give a business extra time to document deductions and consider the impact of recent tax law changes. This extra time can be especially important to businesses that are particularly busy during the first quarter of the year.
Business owners should be sure to consider state and local taxes as well as federal taxes, says the Washington Post. Some states, but not all, automatically grant extensions to businesses and individuals approved for federal tax extensions.Learn more about Taxes