How to Buy More Time on Your Taxes With an Extension Don't feel pressured to file by April 15. If you're scrambling to get your taxes done this weekend, you might be better off filing for an extension. Here's how to do it the right way.

By Mark J. Kohler

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Shutterstock

There are a lot of misconceptions about the process of filing an extension. But getting more time to do your taxes by filing an extension can be an important strategy for the small business owner.

One of the biggest misconceptions people have is that you will increase your chances of an audit with an extension. Tax professionals will tell you this is a myth. In fact, many believe you actually reduce your chances of an audit by extending.

The reality is the IRS doesn't wait to focus all their resources on the more than 10 million estimated taxpayers that file extensions. Instead, they get to work in the spring on those who have already filed their returns. It's not extensions, but rather income and expense data that truly dictate the audits assigned each year.

So what are some important benefits of filing an extension and key facts you should know?

Filing an extension gives you the extra time you need to gather books, data and receipts to insure all your information is correct. With this time, you can re-evaluate your tax strategy and what write-offs you might be missing.

Related: 6 Fundamental Tax Tips for Entrepreneurs

If you have procrastinated getting your information to your tax professional, giving it to them at the last minute isn't going to help either. Everyone knows that CPAs aren't sleeping this time of year. Why expect extra TLC on your tax return when they're already focused on clients who got their data to them sooner?

Many tax professionals appreciate when their clients are willing to extend. An extension gives them more time to meet with you and better strategize in May or June when their time is more manageable.

But remember: an extension gives you more time to file, not more time to pay your taxes. It's important that you estimate what you think you owe and send it in with your extension. This will reduce penalties and interest on what should have been paid by April 15. If you think you will receive a refund, don't stress -- as soon you file, your check will be in the mail.

Many people don't realize that extension periods vary based on the type of business you own and operate.

Related: 5 Questions to Ask Before Filing Your Taxes

For individuals and sole proprietors, you can receive an automatic six-month extension, giving you until October 15 to file. If you want an extension, you can easily download and file IRS Form 4868.

For limited liability companies (LLCs) and partnerships, business owners can receive a five-month extension until September 16 this year (due to the 15th falling on a weekend) by filing IRS Form 7004.

S and C-Corporations must have already filed their extension by March 15 with Form 7004 and have until September 16 to submit their final returns.

Bottom line: Don't feel rushed and pressured to file by April 15. There's a reason for extensions and no penalty to extend. If you don't feel comfortable with your records or preparing your own return at the last minute, there will be plenty of excellent tax professionals available in May to help you do it right.

The goal here is to save taxes and file an accurate return, not be rushed to file by April 15.

Related: Simple Strategies for Last-Minute Tax Filers

Mark J. Kohler

Entrepreneur Leadership Network® VIP

Author, Attorney and CPA

Mark J. Kohler is a CPA, attorney, co-host of the podcasts Main Street Business and Directed IRA Podcast and a senior partner at both the law firm KKOS Lawyers and the accounting firm K&E CPAs. He is also a co-founder of Directed IRA Trust Company. He is the author of The Tax and Legal Playbook, 2nd Edition and The Business Owner's Guide to Financial Freedom.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Starting a Business

This Retiree's Leisurely Side Hustle Makes $66,000 a Year and, 'You Don't Even Need to Go to High School to Do It'

Barbara Hill wanted a flexible, part-time job that would transition well into retirement. Now she mentors younger people who are making over $200,000 a year. Here's her insider's guide to getting started.

Business News

Who Owns The Rights to Your AI-Generated Content? Not, It's Not You. Uncover The Scary Truth That Puts AI Users At Risk.

The realization that copyright laws do not protect AI-generated material might come as a shock to many.

Marketing

The Miley Cyrus Approach To Marketing — Why It's a Radically Different Method For Achieving Brand Impact

In case you missed it, Miley Cyrus recently won her first Grammy. In her acceptance speech, she told a story that is a great learning lesson for business owners and marketers alike, especially those who find themselves burned out and exhausted in this current environment.

Business News

HP Wants You to 'Never Own A Printer Again,' Launches Rental Subscription

In February, HP's CEO Enrique Lores stated that making printing a subscription service was the company's "long-term objective."

Business News

Elon Musk Sues ChatGPT-Maker OpenAI, Accuses the Company of Working to 'Maximize Profits For Microsoft, Rather Than For the Benefit of Humanity'

Musk claims that OpenAI's partnership with Microsoft threatens its original mission as outlined in a founder's agreement.

Business News

IKEA Price Increases Are Going Viral — Here's How Much Your Favorite Couch Costs Now: 'Inflation Is Crazy'

A video with a customer complaining about "inflation" and "corporate greed" has racked up over 1.3 million views on TikTok.