Understand the Income Tax Filing Deadline for Small Online Businesses

Michael Pignatelli
Sep 16, 2022

No matter how small your e-commerce business is, you still have a tax liability. That's right - even if you sell a few items online, you must still pay taxes on your earnings. There are several different types of taxes that you may be responsible for, but today we'll focus more on filing your income tax.

If you're unsure what that tax deadline is or what else you need to do to file your taxes, don't worry - this blog post will break everything down for you. Keep reading to learn more!

Income Tax Filing Deadlines for Business Finances

Businesses have to pay income tax like individual taxpayers based on their profit. And like personal income tax returns, you have tax return due dates you need to take note of.

Quarterly Estimated Tax Payments

Estimated payments are exactly what they sound like - a rough estimate of taxes you owe per quarter. Businesses must file these tax returns if they expect to owe at least $1,000 in taxes for the year. Your estimated tax payment is typically made four times per year.

Estimated taxes can be tricky. After all, your income, deductions, and credits can change from year to year, making it difficult to know how much you'll owe. However, you can calculate your current year's taxes using your income, deductions, and credits from the previous tax year. 

Of course, your actual tax liability may be higher or lower than your estimate, but using last year's information can be a helpful way to get started.

Yearly Federal Income Tax

Unfortunately, quarterly payment due dates for an income tax return aren't the only business tax deadline you need to look out for. Businesses also need to file tax returns on a yearly basis.

Having a 12-month accounting cycle has a specific purpose for small business owners who owe taxes. The tax year is often based on the regular calendar year, but it can be any 12-month period used consistently. It can also be a fiscal year, an accounting period ending in any month except December. 

Online business owners can choose to use the calendar year or a different 12-month period as long as they use it consistently. The IRS imposes deadlines for filing taxes and paying taxes due. Thus, you must pay on the 15th day of the 4th month after the end of the fiscal year. 

But for this 2022, the due date fell on a legal holiday (Emancipation Day), thus moving the due date to the next business day, April 18, 2022. If the tax due date falls on a weekend or a holiday, federal tax payments are made after those dates.

Tax Extension Deadlines

An extension allows affected taxpayers to file their tax return by October 15 if they file Form 7004 before the April 15 deadline. Once you have finished filing Form 7004, you will have an automatic six-month extension to file your return. 

Take note, though, that filing for a later deadline doesn't give you wiggle room for you to pay your taxes later. Therefore, you should still estimate this important tax deadline and make any necessary payments by the regular filing deadline.

Income Tax Filing Deadline in Canada Revenue Agency

In Canada, tax preparation happens differently. Business owners must make their tax filings by June 30. Meanwhile, you must pay your tax dues before April 30. 

So if your tax professional advises you to file tax forms and tax returns before June, it's ideal so your business taxes will align with your payment due in April the following year. Being organized and prepared can ensure that you meet your tax obligations on time.

Ecommerce Businesses Exempted From Income Taxes

There is a lot of confusion about whether online businesses are exempted from income taxes. The simple answer is: it depends.

If your ecommerce business is registered as a sole proprietorship, you will still need to file an annual income tax return and pay taxes on your net profit. But if your ecommerce business is registered as an S corporation, you may be exempt from paying corporate income taxes

There are also specific tax types that ecommerce business owners can be relieved from. Still, it's important to speak with a tax advisor or financial professional to tend to your specific tax needs.

Every Tax Tip for a Complete and Accurate Return

Filing your taxes can be pretty painless if you take the time to stay organized throughout the year and know what to expect come tax season. Learn how to take the edge off when these tax deadlines are fast approaching. 

Pay Taxes and Get Your Refund

The easiest way to file is to do it electronically. The income tax e-filing deadline will be less of a headache if you can pay using accounting or tax software. This typically results in a refund being issued in less than a month. Direct deposit is simple and effective. Plus, it's more secure than sending a paper check.

Amend Your Tax Form

What if you realized you added too many zeroes to your income tax return after you had already filed it? Don't panic - this is surprisingly common among many new and veteran business owners. 

First, gather relevant information or documents to help you correct the mistake. Then, you can file Form 1040X to make changes to your tax return. This form allows you to make changes to your previously filed return and must be submitted within three years of the original filing deadline.

If the error resulted in you paying more taxes, you must be prepared to pay interest or penalties needed. On the other hand, if the mistake decreases your tax bill, the tax agency can refund the amount. In either case, acting quickly and taking care of the problem is important to avoid any potential headaches.

File Your Tax Return With Unloop

That's it for our tax tips for small online businesses! Although the April 18 deadline has already come and gone, it's not too late to file your tax return if you are a small business owner. For those of you who prefer to have someone else handle your taxes, Unloop is here to help. With Unloop, you can easily and quickly file your taxes anytime, anywhere. And there's no need to worry about making mistakes - our expert team will review your return and ensure everything is correct before filing. We'll also help you maximize your refund to get the most out of your hard-earning profits. So why wait? File your tax return with Unloop's tax professionals today!

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About unloop
Unloop is the first and only accounting firm exclusively servicing ecommerce and inventory businesses in the US and Canada. With the power of people and technology, our team dives deep into COGS and inventory accounting.. You are paired with a dedicated bookkeeping team that prepares accurate financial statements, financial forecasts, and can also pay bills or run payroll for you. Come tax time, everything is organized and ready to go, so you don't need to worry. Book a call with an ecommerce accountant today to learn more.
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