The March 15th deadline is a crucial date for partnerships, multi-member LLCs, and S corporations. These business structures are considered “pass-through entities,” meaning the business itself does not pay taxes. Instead, the business’s income, deductions, and credits “pass through” to its owners or shareholders, who report this information on their personal tax returns. However, even though these businesses don’t pay taxes directly, they must still file tax returns and provide crucial documentation by the March 15th deadline to avoid penalties and potential issues.

In this article, we’ll dive into what each type of entity must do before March 15th, including filing requirements for income tax returns, extension possibilities, and tips for electing S corporation status for the upcoming year.

1. S Corporations: Filing Form 1120S by March 15th or Extending Your Deadline

An S Corporation is a special type of corporation that meets specific IRS requirements and elects to be taxed under Subchapter S of the Internal Revenue Code. As a pass-through entity, an S Corp does not pay federal income taxes at the corporate level; instead, income, losses, and other items are passed on to the shareholders, who report them on their individual tax returns. This makes timely filing critical to ensuring that shareholders can accurately report their earnings.

What Is Due by March 15th?

• Form 1120S: If your business is an S Corporation, you are required to file Form 1120S, U.S. Income Tax Return for an S Corporation, by March 15th. This form reports the income, deductions, gains, losses, and other relevant information about the corporation. It serves as the foundation for shareholders to report their share of the corporation’s income on their individual tax returns.
• Schedule K-1 (Form 1120S): As part of the Form 1120S filing, you must issue Schedule K-1 to each shareholder. This form details the shareholder’s share of income, deductions, credits, and other items passed through from the S Corp. Shareholders use Schedule K-1 to complete their personal income tax filings.

Filing for an Extension

If your S Corporation cannot meet the March 15th deadline for filing Form 1120S, you can request an extension of time to file. This extension gives you an additional six months, moving the deadline to September 15th. To request an extension, file Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, by the March 15th deadline.

• Note: Filing an extension only extends the time to file your return; it does not extend the time to pay any taxes owed. If your S Corporation has a tax liability, you must pay the estimated amount owed by March 15th to avoid penalties and interest.

What Happens if You Miss the March 15th Deadline?

If you miss the March 15th filing deadline and have not filed for an extension, the IRS may impose penalties for late filing. The penalties can be significant, typically based on the number of shareholders and the amount of time the return is late. Additionally, shareholders may face delays in receiving their Schedule K-1, which could affect their personal tax filings.

2. Partnerships: Filing Form 1065 by March 15th or Extending Your Deadline

Like S Corporations, partnerships are pass-through entities, meaning the business itself does not pay income taxes. Instead, partnerships report their financial results on Form 1065, U.S. Return of Partnership Income, and the profits or losses are passed through to individual partners, who report them on their tax returns.

What Is Due by March 15th?

• Form 1065: If your business is structured as a partnership (including multi-member LLCs), you must file Form 1065 with the IRS by March 15th. Form 1065 reports the partnership’s income, deductions, credits, and other information. Similar to S Corporations, partnerships issue Schedule K-1 to each partner, detailing their share of the partnership’s income, deductions, credits, and other items. Partners then use this information to complete their individual tax returns.
• Schedule K-1 (Form 1065): The partnership must provide each partner with their own Schedule K-1 by March 15th. This is a crucial document for your partners, as it outlines how much income or loss they must report on their individual tax returns. Make sure this is accurate to avoid complications for your partners during tax season.

Filing for an Extension

If your partnership is unable to file Form 1065 by the March 15th deadline, you can request a six-month extension. To do so, file Form 7004 by March 15th to request an automatic extension. The extension moves the filing deadline to September 15th.

• Important Note: As with S Corporations, an extension to file does not extend the time to pay any taxes owed. If the partnership has any tax liability, you must make a payment by the original due date of March 15th to avoid penalties and interest.

What Happens if You Miss the March 15th Deadline?

Missing the March 15th deadline for filing Form 1065 without an extension can result in substantial penalties. The IRS imposes penalties on partnerships that fail to file their returns on time or fail to provide accurate Schedule K-1 forms to their partners. The penalty can be per partner, and it adds up quickly.

• The penalty for late filing of a partnership return is typically $210 per month per partner for each month the return is late, up to a maximum of 12 months. This means that a partnership with several partners could face substantial penalties if they fail to file on time.

3. Filing for S Corporation Status: Form 2553 Deadline

If you want to elect to have your business treated as an S Corporation for the upcoming calendar year, the deadline to file the election is also March 15th.

What Is Form 2553?

• Form 2553, Election by a Small Business Corporation: This form is used to notify the IRS that your business wishes to be treated as an S Corporation for tax purposes. Once approved, the business will be taxed as an S Corporation, and the tax obligations will shift from the corporation to the shareholders.

Filing Deadline for Form 2553

To elect S Corporation status for the 2025 calendar year, you must file Form 2553 by March 15, 2024. This is the critical deadline for making an election to be treated as an S Corporation for the next tax year (2025).

• If you miss the March 15th deadline, your business will be treated as a C Corporation for the upcoming year unless you qualify for late election relief.
• Late Election Relief: If you miss the March 15th deadline, you may still be able to make the election for the next year if you meet certain requirements. You will need to file Form 2553 with an explanation for the delay and may need to demonstrate that you had reasonable cause for the late filing.

Why Choose S Corporation Status?

Electing to be taxed as an S Corporation offers several potential tax benefits. These include:

• Avoiding Double Taxation: Unlike C Corporations, S Corporations are not subject to double taxation. The business’s income is taxed only at the individual shareholder level, not at the corporate level.
• Self-Employment Tax Savings: S Corporations may offer potential savings on self-employment taxes, as only the salary portion of a shareholder’s income is subject to Social Security and Medicare taxes, while the remaining income is not subject to these taxes.
• Pass-Through Deductions: As a pass-through entity, an S Corporation allows its shareholders to deduct business losses and other items directly on their personal tax returns.

However, before making the decision to elect S Corporation status, it is essential to consult with a tax professional to ensure this is the best choice for your business.

4. Final Thoughts: Staying Ahead of the March 15th Deadline

For partnerships, multi-member LLCs, and S Corporations, the March 15th deadline is crucial. Failing to file the necessary forms on time can lead to penalties, delays in issuing tax documents to your owners or shareholders, and complications in your personal tax filings.

Here’s a quick checklist to help you stay on track:

• S Corporations: File Form 1120S and issue Schedule K-1 by March 15th. Consider filing for an extension using Form 7004 if necessary.
• Partnerships: File Form 1065 and issue Schedule K-1 by March 15th. If needed, file for an extension with Form 7004.
• S Corporation Election: File Form 2553 by March 15th to elect S Corporation status for 2025.

Planning ahead, gathering necessary information early, and consulting with tax professionals can help ensure your business stays compliant with IRS requirements. By meeting the March 15th deadline, you can avoid penalties and focus on running your business without unnecessary distractions.

If you need assistance with any of these filings or have questions about whether your business should elect S Corporation status, don’t hesitate to reach out to HSC/Tuscan & Company, P.A. Our team of tax professionals is here to help guide you through the process and ensure your business stays on track — (239) 939-2233