As a business owner, the arrival of tax season and figuring out everything a business needs to do – such as the business tax deadline – may bring some anxiety along with it. But knowledge is power and being aware of your obligations, key dates, and how to get an extension will arm you with what you need to get through the 2022 business tax deadlines.
Whether you own a business or are in charge of navigating tax season on behalf of one, this helpful guide will take you through the business tax deadlines and more to make filing your 2021 tax returns a breeze.
Business Tax Deadlines for 2022
The deadline to file your 2021 taxes is Monday, April 18, 2022.
Although tax day can feel as though it sneaks up fast, preparing your taxes is a great time to reflect on your previous year’s success and set new financial goals to reach.
It’s also worth remembering that failure to file by the due date can result in the IRS penalizing you between 0.5-25 percent of the amount owed, so do your best to avoid those by filing your returns on time. That said, if you need more time to get your return in order, you can apply for a tax extension, which we’ll cover further on in this guide.
Depending on the type of business you own or where you operate, there may be other dates to keep in mind. Here are a few different deadlines to add to your calendar that may apply to you.
March 15, 2022 – Partnership Returns Due
Tuesday, March 15, 2022, is the business tax deadline for partnerships, S corporations, or multi-member LLCs (forms 1065 and 1120S). This deadline is earlier as it gives partners time to receive their individual Schedule K-1 documents for their personal tax returns.
April 18, 2022 - Corporate tax returns due
Small business owners should either file their taxes or apply for an extension by Monday, April 18, 2022. This group includes freelancers, sole proprietors, single member LLCs, household employers (form 1040), and C corporations (form 1120).
April 19, 2022 – Corporate tax returns due for Maine and Massachusetts
Due to a state holiday on April 18, the deadline for those filing in Maine and Massachusetts is Tuesday, April 19, 2022.
October 17, 2022 – Extended tax returns due
If you filed for a tax deadline extension, this is the last day for taxes, and you need to have your 2021 tax return submitted by this date.
Who Needs to File a Return?
If you are a small business owner, you must file a tax return. However, the type of taxes you pay is up to your business structure.
All businesses must file a tax return and pay federal tax on any income earned and received. The only exception is Partnerships, which file an annual information return, and then each partner reports their share of profits or losses on their individual return.
You also need to pay Social Security and Medicare taxes if you're self-employed. Meanwhile, if you have an employee, there are multiple requirements for employment tax.
What About Sales Tax?
The location of your business and your customers will impact where you may be required to collect sales tax. Many factors go into this, and it can be hard to keep track of your obligations, even for long-time business owners. Shopify has now made this a little easier with Sales Tax Insights.
You can access these insights in the Taxes section of your Shopify Store’s Settings. After heading there, select United States, and get an overview of your potential sales tax obligations.
On the Sales Tax Insights page you’ll see where you are currently collecting sales tax, where you may soon need to collect sales tax, and can find more information on state-specific requirements. We recommend reviewing these insights alongside your accountant or tax professional so that you can proactively plan for the future, and register with the necessary tax authorities when required.
Additionally, it’s important to note you may also have sales tax obligations for sales that take place on other ecommerce sites or marketplaces. Shopify’s Sales Tax Insights will only reflect the transactions that occur within Shopify.
How to Get a Tax Deadline Extension
A tax deadline extension allows you more time to put together your return. It can provide some much-needed breathing space, but it’s important to understand that it only gives you extra time to file your return. You will still need to pay any tax owing by April 18, 2022.
Here are some examples of why you may need the extra time an extension offers:
- You can pay the tax you owe but don’t have your return in order.
- Due to a family or personal situation such as illness, death, or divorce.
- Other circumstances meant you were busy during tax season.
- You don’t have the correct documents or all the documents you need by the original date.
- You believe you’re owed a refund and want to get your tax return together.
A tax deadline extension automatically gives you an additional six months to file your return (seven months for partnerships). However, you must apply for the extension by your tax return due date. For partnerships and corporations, this is March 15, 2022, and for other businesses, this is April 18, 2022 or April 19, 2022 for those in Maine or Massachusetts.
The form you use to file for your extension will differ depending on your business:
- Partnerships and S corporations: Form 7004 and apply by March 15, 2022
- C corporations: Form 7004 and apply by April 18, 2022 (April 19, 2022 in Maine/Massachusetts)
- Sole Proprietorships: Form 4868 and apply by April 18, 2022 (April 19, 2022 in Maine/Massachusetts)
You can file for an extension in several ways:
Print out your correct extension form and mail it to the IRS via certified mail, so you have proof of filing for your extension on time.
Submit your extension form online and e-File it via IRS Free File or another tax preparation software.
Via online payment
If you’re a sole proprietor who will pay taxes online using the IRS’s tax payment system, you don’t need to use a form. Instead, you can easily apply for an extension when you make full or partial payment of your estimated income tax due. To do this, select “extension” when you use the IRS’s tax payment gateway.
Prepare for Your Tax Return
Now that we’ve covered the essential dates and forms you need to file your business tax return, let’s make your life easier. Here are a few other things that will help you to get your finances and financial documents in good order to make filing a breeze.
Have Clear and Concise Bookkeeping
Bookkeeping involves recording and managing your business’s financial transactions, such as sales, purchases, expenses, and payments.
Good bookkeeping is crucial for a business. Having your books well organized will not only make tax filing season that much easier but will help you make well-informed decisions for your brand’s growth. Additionally, it will benefit you if the IRS ever audits your business. And, with the IRS announcing in 2021 it would be increasing the number of small businesses it audits, sound bookkeeping is crucial.
You can use a Shopify Balance account to make tracking your business’s finances more manageable. Having a cash management account within the Shopify ecosystem means you can manage your business and its money from the very same place.
If you want to keep your books yourself, there’s plenty of accessible and easy-to-use small business accounting software that allows you to do this – and they integrate with your Shopify store.
And, if you find you're spending too much of your time on bookkeeping, or you're not confident in doing so, it could be worth paying a professional bookkeeper to take this task off your hands.
Make a Note of Possible Deductions and Credits
Tax credits and deductions can be confusing to navigate, and many small business owners miss out on reducing their tax liability as a result. Deductions work to reduce your total taxable income, whereas tax credits reduce your tax bill.
Below we’ve listed a few deductions businesses are commonly qualified for, along with some examples of tax credits you could be entitled to. You can read more about small business tax deductions here. Finally, a tax professional will give you a complete picture of what deductions and credits apply to your situation.
If you do most of the work on your business from a dedicated space in your home, that could be considered a home office and could be tax-deductible.
You can do this two ways. One way is to deduct $5 per square foot of your home used for your business (to a maximum of 300 square feet). The other is calculating the percentage of your home that you use for your business and applying that percentage to your home expenses, including mortgage, rent, electricity, and more.
If you make and send physical products, then products associated with shipping are deductible, including postage and packaging.
Internet and phone
If you have a phone used entirely or partially for business purposes, your phone plan is wholly or partially deductible.
A phone used solely for business is fully deductible; meanwhile, you can deduct the business use percentage if you use a phone for business and personal use. For example, if you use a phone 25 percent of the time for business use, you can deduct 25 percent of your phone plan. It would be advantageous to keep itemized phone bills to back up this claim.
The same goes for the internet. Either fully deduct the cost of the internet in an office, or partially deduct the cost if you work from a home office.
You can deduct premium costs if you have insurance for your business (including business equipment or group health insurance).
Business travel and meals
If you travel away from your main place of work for business purposes, you can deduct the costs of this, including transport, accommodation, laundry services, and tips. Be sure to keep track of your mileage for business travel, including odometer readings and records of trips and their purpose.
Meals are usually deductible at a 50 percent rate; however, the IRS has made a temporary change. From January 1, 2022-December 31, 2022, businesses can deduct 100 percent of the costs of restaurant meals.
Legal and accounting services
If you engaged the services of a legal professional, accountant, or bookkeeper to help run your business, the fees charged are all deductible business expenses.
Possible tax credits:
- Small Business Health Care Tax Credit
- Work Opportunity Tax Credit
- Employee Retention Credit
- Disabled Access Credit
How to Get Organized for Next Year
With your 2021 tax returns under control, it’s never too early to start thinking about the 2022 business tax deadline and what you can do to make it as easy as possible.
Our number one piece of advice is to make sure you have a dedicated business account separate from your personal spending. And as a Shopify merchant, you already qualify for a free Shopify Balance account.
A Shopify Balance account allows you to manage your business’s money, and it’s connected to your Shopify store, so everything is in one ecosystem – no need to struggle with multiple apps and accounts. Plus, you get faster access to the money you’re making through your Shopify store and earn cashback.
When is the Last Day for Taxes in 2023?
The exact date to file your tax return can vary year to year, depending on when April 15 falls. If April 15 is a weekend or holiday, this pushes the date to the next business day.
If you’re looking to get organized in advance for tax season, here’s what you need to know:
- The deadline for your 2022 taxes is Monday, April 17, 2023.
- The date for filing your 2023 taxes is Monday, April 15, 2024.
Although filing a tax return for your small business might be outside your comfort zone, this information and advice should help you make an informed next step and alleviate some tax season stress. Being a business owner is a wild journey, so embrace financial preparation and make this upcoming tax season your most organized yet.