Tax Compliance Calendar for 2021

Here’s a small business guide for key 2021 tax dates and how to best prepare for next year’s taxes.

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tax compliance calendar 2021
FAQs on deadlines, what type of returns to file, and when to start doing your taxes

2020 has been a wild ride for everyone, especially small business owners. Thankfully, Q4 means that you’re in the homestretch to a brand new year in just a few short months.

Perhaps your business is still shut down or slow thanks to pandemic precautions and you’ve got extra time on your hands. Or you’re so ready for 2020 to be over that you can’t wait to prep for 2021. Whatever the reason, now is a great time to start planning out how to make next year your most streamlined one yet.

What better way to kick that off than by whipping up your 2021 tax compliance calendar to make sure that you hit every deadline and don’t get stuck with any late payment penalties?

Here are the key tax dates that you should definitely have on the calendar for next year, especially after the COVID-related extensions and the like that have jumbled the 2020 deadlines.

When are business taxes due?

The due dates for your taxes depend entirely on both what kind of taxes you’re talking about, what kind of small business you run, and where you’re located.

The due dates for your taxes depend entirely on both what kind of taxes you’re talking about, what kind of small business you run, and where you’re located.

Let’s start with federal income taxes. While many people choose (or are required) to submit income taxes on a quarterly basis, some opt for the one-time annual payment route.

  • If you’re a sole proprietorship, you’ll use the same tax schedule as individuals which means that your taxes are due on April 15, 2021
  • If you’re running a S corporation or a partnership, your taxes are due a bit earlier on March 15, 2021

Federal employment taxes, depending on your filing status, are submitted either biweekly or monthly depending on your tax filing status. Remember that — when it comes to employment taxes — at the end of each year you’ll have to distribute year-end tax documents to employees. These documents detail how much money has been withheld from their checks throughout the year. You’ll also have to give a copy to the Social Security Administration.

Your employees will then submit the necessary paperwork depending on their type of employment (form W-2 for employees and form 1099-MISC for independent contractors, as well as forms 3921, 3922, 1097, 1098, and W-2G if you use them) as part of their taxes. Businesses have until January 31 of the following year to both submit these forms to the Social Security Administration and distribute these forms to employees and contractors. Businesses then have until February 28 to submit these forms to the IRS which are then used to verify the taxes your employees submit.

When are sales taxes due?

The most important thing to know about paying sales tax is that this happens at the state level, which is where it’s decided if you even have to pay sales taxes at all.

Any business that sells something (a lot of them) also has to pay sales taxes. The most important thing to know about paying sales tax is that this happens at the state level, which is where it’s decided if you even have to pay sales taxes at all. Five states — Alaska, Oregon, Montana, Delaware, and New Hampshire — don’t have sales tax. Alaska, however, does allow for local municipalities to impose a sales tax, so if you’re located there, you’ll want to dig into your city’s ordinances.

Small business owners with locations anywhere else will have to figure out their sales tax requirements on the state level. Every state is different, but here are some of the main ones:

  • California: There are state, local, and district tax rates in California, so you’ll want to make sure you have all of your sales tax bases covered. When you register your business in California, you’ll be assigned a filing frequency that ranges from monthly to yearly and that’s the structure you’ll follow for filing.
  • New York: The New York City sales tax rate is 4.5%. On top of that there’s a 4% New York State tax and a 0.375% Metropolitan Commuter Transportation District surcharge. The total sales and use tax in New York is 8.375%. Sales taxes in New York can be filed quarterly, monthly, or annually.
  • Illinois: In Illinois it’s the volume of sales taxes you collect and the status of your account with the state that dictates when you’ll file. Returns can be filed on a monthly, semi-monthly, quarterly, semi-annual, or annual basis.

What if I miss the deadline for business taxes?

If you missed the deadline but have already filed for an extension to both file and pay your taxes late (these are separate — you can request an extension to file but without an extension to pay, you’re still on the hook for the money you owe at the time you’re supposed to owe it), breathe a sigh of relief. These extensions typically allow for an extension of up to 6 months with the extended deadline traditionally landing on October 15.

If not, the 2 things you’ll want to get familiar with are the failure to file penalty and the failure to pay penalty:

  • The failure to pay penalty is roughly one half of 1% for each month, up to 25% of the amount of tax that remains unpaid
  • The failure to file fee is 5% of the unpaid tax required to be reported charged each month for up to 5 months

The good news is that the failure to file fee is reduced by the failure to pay fee if both penalties apply. There are also late filing penalties that apply.

Ultimately, you’ll want to hurry up and file and pay as quickly as you can to avoid a mountain of penalties.

What type of tax return do I file for my business?

There are all kinds of IRS forms that you’ll want to get familiar with. The thing is, each form is different. Some small businesses need to file certain forms depending on the type of business they do, while others won’t because the IRS requires different forms for various kinds of businesses. Even within these forms there can be other forms that are required.

That said, all businesses (save for partnerships) have to file an annual income tax return. Individuals who work for themselves will have to pay self-employment taxes, and those with employees will naturally have to pay employment taxes.

When can I start doing my taxes for 2020?

The IRS usually starts accepting tax payments sometime between mid-January and late February — which they’ll announce when the new year grows closer. However, here’s no need to wait until any deadlines if you’re ready to file sooner. Once the year is closed, you’ve got everything you need to file your taxes — so if you’ve got down time over the holiday and want to get a head start, go for it! Remember that you have the option to file hardcopy paperwork or file electronically online, depending on what works best for you.

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