Tax Filing Extension Can Be A Benefit For Small Business
Here’s a small business stereotype: a wild-eyed company owner, frantically filing for an extension of the income tax filing deadline.
Sure, there are many owners panicking as April 15 approaches, but there’s another, calmer group out there – owners who routinely and methodically file for extensions as part of their year-round financial planning. Many of these owners use extensions to give themselves more time to fund their employee retirement plans.
“Most of the extensions we see are for that very reason,” said Gordon Spoor, a certified public accountant in St. Petersburg, Fla. “It’s a cash flow consideration.”
An extension allows taxpayers – including company owners who file business returns along with 1040s – an extra six months until Oct. 15 to file their returns. Under the tax law, the owner doesn’t have to make a prior-year contribution to a retirement plan until the due date, including an extension, of his or her return.
And so many owners this year will take advantage of that extra time to determine how much money they can contribute for 2007. And the size of the contribution, in turn, can affect an owner’s tax bill.
Extensions also come in handy for members of a partnership. Read on…
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