There are many reasons to file a business tax extension, but one of the best is that it gives you time to review expenses and optimize your tax savings. The process is easy, and business owners often use the extra time to maximize tax benefits. This is how to file a business tax extension for your 2022 taxes.
What are the deadlines for a business tax extension?
Monday, October 16, 2023 is the tax filing extension deadline for sole proprietors, single-member LLCs, S corporate owners, partnerships, and corporations who requested a tax extension in their 2022 tax return.
How do I file for a business tax extension?
There is no penalty for requesting a deadline, but you must complete an extension form for the IRS. The form you complete depends on the type of business you have.
If you are a sole proprietor filing a schedule C, then you will submit a 4868 form. If you are a corporation, then you must submit a 7004 form.
Remember: an extension of time to file your tax return is not an extension of the time you have to pay (if you owe taxes). You should estimate how much tax you think you owe and then send the estimated payment in with your extension. You can get a refund later if you overpay, but you’re likely to incur penalties or interest if you don’t pay anything.
Common deductions to consider
Once you have filed your business tax extension form, you can begin looking for more ways to maximize your tax advantage. Many valuable write-offs are missed in the rush to file in spring, so use the extra time to investigate common deductions like the following:
Travel-related expenses
Business owners consistently underutilize this deduction, which covers expenses like airfare, accommodations, and transportation-related costs such as rental cars, taxis, trains, tolls, and more.
Travel expenses are 100% deductible, unlike meals and entertainment costs, which are limited to a 50% deduction. Analyze your travel from the past year and note any instances where you met with a client or vendor, had a business meeting, toured a facility, met with your board or shareholders, held a conference, etc.
Auto deductions
If you use a vehicle for any business-related activities, you can list those expenses on your tax return. There are two main ways to calculate this deduction: mileage or actual expenses.
Most business owners choose the mileage method, which was broken out the following way for 2022:
- Standard mileage rates for using a vehicle, van, pickup, or panel truck for business purposes was 58.5 cents per mile beginning January 1, 2022.
- From July 1, 2022 onward, the rate increased to 62.5 cents per mile for business purposes.
Dining and entertainment
All those dinners, lunches, and morning coffee meetings add up to a healthy deduction—especially if you spent the time discussing business with a partner, potential client, vendor, or strategic ally.
Business owners are entitled to the full deduction in all of those scenarios so be honest about your actual expenses and underestimate.
Office supplies and technology
The majority of your office supplies and technology purchases can be fully expensed, whether you’re upgrading your phone, buying computers, or ordering iPads for everyone.
Keep every receipt and list every expense so you receive your maximum tax benefits.
Other business deductions
Remember that you may be entitled to many more tax advantages than you know. Business owners frequently miss opportunities for additional deductions because they don’t understand all that’s available to them or they’re worried about an audit.
If you keep accurate records, there is no reason not to list the full amount of all your business expenses. Even if the IRS disagrees, the worst they can do is disallow it.
Make tax time easier
PaySimple knows you don’t have hours to waste on accounting, so we make easy for you to see your business’s financial progress in real time. With PaySimple, you can integrate your payment solution directly to QuickBooks so your tax filing process is efficient every year. Feel prepared come tax time, with accurate and up-to-date records that help make filing business taxes easier than ever! Contact us for more information.
