The Form 1065 and Form 1102S filing date, or request for an extension deadline, is always on the 15th day of the 3rd month after a business entity’s tax year (a.k.a. March 15th). But did you know less than 20% of applicable filers make this very important deadline? If you are in a business partnership, here is what you need to know!
About Business Partnerships
The Internal Revenue Service (IRS) defines a partnership as “the relationship between two or more people to do trade or business” and notes that “a partnership does not pay tax on its income but ‘passes through’ any profits or losses to its partners.” Whether it is a general or limited partnership, or a limited liability corporation (LLC) or S corporation (S corp), “each person contributes money, property, labor or skill, and shares in the profits and losses of the business.”
About Form 1065
Per the IRS, “Partners are not employees and shouldn’t be issued a Form W-2.” Instead, “The partnership must furnish copies of Schedule K-1 (Form 1065)” to each partner. As detailed by Investopedia, the purpose of Form 1065, Return of Partnership Income, is to declare the profits, losses, deductions, and credits of a business partnership. “Form 1065 provides the IRS with a snapshot of a company’s financial status for the year. The partners must report and pay taxes on their shares of income from the partnership on their individual tax returns and pay income tax on their earnings regardless of whether earnings were distributed,” per Investopedia,
About Form 1120S
Form 1120-S (another type of Schedule K-1) is used to “report the income, gains, losses, deductions, credits, etc. of a domestic corporation or other entity for any tax year covered by an election to be an S corporation,” as noted by the IRS. This designation allows corporations with 100 shareholders or less to avoid double taxation as a pass-through entity—in other words, “the benefit of incorporation while being taxed as a partnership,” according to Investopedia. More information on the benefits of S corp elections can be found here on our blog, along with additional information and advice for tax season.
Like Form 1065, Form 1120-S should be filed electronically, with expert assistance from an accountant to reduce the likelihood of errors and missed deadlines. Locally owned and operated in the Greater Philadelphia area, Drake Tax Services has been going above and beyond for our clients for over 30 years! We offer timely, accurate, and secure tax preparation services for individuals and small businesses, and as always, we are happy to help. If you need a tax accountant you can rely on, visit our website to learn more about our services, or click here to book an appointment today.
Drake Tax Services has been serving the Greater Philadelphia area since 1997. Its founder, Anthony F. Drake, is a professional accountant and IRS approved tax preparer who specializes in local, state and federal tax returns for both individuals and small businesses.
