If you’re filing your own business tax extension, it indicates that you’re probably not working with an accountant. (Otherwise, why aren’t they doing this for you???)
While I don’t believe that extensions are inherently bad, filing your own extension is another story. Let’s talk about it!
At CSI Accounting & Payroll, we’ve provided year-round accounting and tax services to small businesses for nearly 60 years. That means we’ve talked to a ton of prospective clients who have handled their own taxes and wanted to know:
Can you file a tax extension for your business? Of course! It’s fairly simple to extend the due date of your tax paperwork by six months. Here’s how.
If you use big-name accounting software to handle your bookkeeping, that same software may be used to file for an extension. A quick search will tell you if your software can handle this task.
Otherwise, completing Form 7004 is also easy. You can submit an electronic form on the IRS website or even do the classic mailed paper form.
Not sure how to fill out Form 7004? No worries! The IRS provides detailed instructions to help. (Or an accountant can be your saving grace.)
Extensions are not always bad. However, they’re not scary enough to some – and too scary to others.
For those who aren’t scared of extensions, the only warning that I’ll give about them is that extensions only extend the due date of your paperwork. Your tax money is still due on the original due date of the tax return. Extensions aren’t a free pass to delay paying your taxes – unless you also want to pay additional penalties and interest.
For those who are terrified of extensions, remember that they’re okay. Unless you file for extensions for years and years, they’re not going to increase your chance of being audited, and they won’t have any consequences if you pay your taxes on time. However, extensions can indicate red flags behind the scenes. Let’s get into those in the next section!
Is it inherently bad to file your own extension? No! But let’s think about why you’re filing it. Let’s explore filing your own extension when you work with:
If you’re working with an annual tax accountant, it’s my opinion that they should offer to file your extension.
You should ask why they need to file an extension. After all, you hired them so you wouldn’t need to worry about your taxes. As long as you gave them everything they needed, if they didn’t have time to file your taxes, they shouldn’t have accepted you as a client.
(Pssst! Did you know that monthly accountants are structured to always be able to accept new clients?)
If you handle your own bookkeeping with professional software, you may also use that software to do your taxes. There’s nothing wrong with this.
However, I start to get concerned when I hear that a business owner is handling everything on their own and needs an extension. Why? Because it means that they either don’t know how to complete their taxes or, more likely, they don’t have enough time.
Whether it’s confusion or a lack of time, you shouldn’t be filing for an extension because you shouldn’t be handling your own taxes in the first place. Depending on your business’s situation, you may not even be spending your time correctly if you do your bookkeeping.
Hiring an annual tax preparer or a monthly accountant may be right for you! Get your valuable time back, and spend it where it matters most to your business.
I’ll close with an important point. If you give your monthly accountant everything they need to do your taxes, you won’t have to worry about extensions anymore. You can get that off your shoulders!
Now that you know how to file your business tax extension, that extensions aren’t bad but can indicate deeper red flags, and why it’s a bad sign if you file your own extension, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn more about what it’s like to work with us by clicking the image below: