S-corporation and LLCs can opt for the extended due date for tax filing till September 15, 2019. Per rule, S corporations to file tax on March 15, and they can seek for extension by filing Form 7004 and deposit what they estimate to owe. This extension is valid for six months and the extended due date for S-corporation is Sep 15 2019 for 2018 calendar tax filing. Single member LLC’s or sole proprietors’ need to document Personal Online Tax Extension or the paper variant of IRS Form 4868 and mail it by means of the U.S. Postal Service for such extension.
S-corporation stands for Subchapter Corporation or small business corporation. It is a special tax designation granted by the IRS in which S corporations do not pay any income taxes. Instead, the S corporations can elect to pass corporate income, losses, deductions, and credits to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax filings and are evaluated at their individual income tax rates.
To be eligible for S corporation status, one must meet the following prerequisites:
- Be a domestic corporation
- Have only allowable shareholders
- like individuals, certain trusts, and estates
- cannot be partnerships, corporations or non-resident alien shareholders
- should not have more than 100 shareholders
- Have only one class of stock
- Certain financial institutions, insurance companies, and domestic international sales corporations are not eligible.
A limited liability company (LLC) is a corporate structure to protect the business owners’ personal assets from being liable to their business losses. Limited liability companies are hybrid entities with combination of a corporation’s characteristics with those of a partnership or sole ownership.
LLCs provide flexibility to business owners in taxation. The IRS does not treat an LLC as a separate tax entity but depending on the situation, an LLC may elect to use corporate tax rules instead of being treated as a partnership.
Difference between S-corporation and LLC
- The owners of LLCs are not personally responsible for business debts and liabilities. The owner of the business of S corp is responsible for its debts and liabilities.
- In S-corporation type of ownership will be Stock, and only one class. S-corporation and LLC are separate legal entities created by a state filing.
- S-corporation and LLC are pass-through tax entities. Therefore, income taxes are not paid at business level but are passed-through owners’ personal tax returns.
- LLC is taxed as an S-corporation means the owner’s salary will be business expense so the owner will report salary and other business profit in their personal income tax return. Their salary is taxable.
- The time of dissolving of LLC is specified in the Operating Agreement, or upon the loss of a member, unless other members agree to continue. But, in S-corporation it is specified as indefinitely.
The Due Date for S-corporation to file tax returns is 15th of March every year. Form 1120S needs to be used by the corporation to report all financial activity. It has to attach Schedule K-1 for each shareholder that will provide information about shareholder’s share of taxable income. The corporations which failed file tax returns by March 15 need to seek extension by filing appropriate forms. Such extension is valid for six month and the extended due date for S-corporation is Sep 15 2019 for 2018 calendar tax filing. The shareholders who pay tax on the corporate income are subject to the same deadlines the IRS imposes on individual taxpayers, which in most cases is April 15 every year.
The IRS never acknowledges receipt or approval of your tax extension but they notify through US postal mail in case the filing is rejected.
IRS Audit Group is a team of tax experts primarily specialized in Internal Revenue Services (IRS) Tax Audit Representation. If you have missed your tax filings or payments and received letter from the IRS for tax audits, don’t hesitate to call us, our certified professional cooperate and work with all IRS offices nationwide and can help you to solve your tax issues.
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