Tax Season | By Olivia Brown | 2025-05-27 11:36:53

How to File a Business Tax Extension in 2025 (and Avoid Penalties)

Running a business in the U.S. means that you have a great deal of responsibility, particularly during the tax season 2025. Occasionally, life gets tough and you simply can not put all your documents together and file before the deadline. If that sounds like you, then you aren't alone. Each year thousands of business people apply for a tax extension.

In recent years, over twenty million taxpayers have applied for a tax extension, as per the IRS data. Extensions provide more time to file your tax return but not to pay what you owe. That is exactly why knowing how you can file properly and on time is essential to stay away from late fees and avoid penalties.

In this blog, we will discuss how to file a business tax extension in 2025, what forms to get, what deadlines to watch out for, and how to avoid common tax-filing mistakes.

What Is the Meaning of a Business Tax Extension?

A business tax extension is a written application to the IRS for more time to prepare your company tax return. It gives you an additional 6 months if you need to hold out for documents, have a crisis or simply need more time to organize your finances.

But here is the catch, an extension provides you with more time to file, not more time to pay. You still must estimate and pay any taxes due before the original due date or face fines & interest.

Who Can File a Business Tax Extension?

It is possible to file for return tax extension in case you operate your business as any of the following:

Sole Proprietorship.

Partnership.

LLC (Limited Liability Company)

S Corp.

C Corporation.

No matter your business structure, you can ask for an extension in case you file before the filing deadline.

Important Tax Deadlines for Businesses in 2025

Know your business tax due date before filing an extension. Following are key federal deadlines through 2025:

March 17, 2025 - Deadline for S Corporations & Partnerships (March 15, a weekend date).

April 15, 2025 - Sole Proprietors & C Corporations Deadline.

You must submit your extension request by your original deadline. You can get punished for missing it by not filing on time.

Which Tax Extension Form Do You Need?

The form you choose depends upon your business type:

1. Form 7004-For Corporations, Partnerships, and Multi-Member LLCs

Use this form when you submit the following returns:

Form 1120 (C corporations)

Form 1120 (D Corporations)

Form 1120S (S Corporations)

Form 1065 (Partnerships).

Note that filing Form 7004 grants you a six month extension.

2. Form 4868 - For Sole Proprietors & Single Member LLCs

You will need this form In case you report business income on your personal tax return (Form 1040 with Schedule C).

This also gives you an automatic 6 month extension, therefore your due date today comes to October 15, 2025.

How to File a Business Tax Extension

A tax extension is fairly simple to file and could be done on the internet or via mail.

Step 1: Estimate Your Taxes

Even in case you have much more time to file, you still owe the estimated taxes in time.

Do this:

Check your financial records.

Use IRS tax calculators or accounting software.

In case you have questions, contact your accountant.

Failing paying the estimated amount in time could lead to interest and penalties.

Step 2: Pick the Right Form

For any corporation, partnership, or multiple-member LLC, use Form 7004. For any sole proprietor or single member LLC, use Form 4868.

Step 3: File Online or by Mail.

You can file the forms:

Online via IRS e-file (fastest and simplest).

Using tax software (TurboTax, H&R Block, or perhaps TaxAct).

Through your accountant.

By mailing a paper form(check the correct IRS address for your state)

Tip: Filing electronically is safer and you receive confirmation fast.

Step 4: Pay Your Estimated Taxes

Include payment whenever you file or use one of these payment methods:

IRS Direct Pay (from your bank account).

Electronic Federal Tax Payment System (EFTPS).

Debit or credit card (may charge fees).

Mail out your form along with a check.

Make sure you postmark your payment by the tax deadline.

What Happens After You File an Extension?

In case you submitted your extension correctly and on time, you receive an automatic 6 month extension to file your return.

New deadlines would be:

September 15, 2025 for Partnerships & S Corporations.

October 15, 2025 for C Corporations & Sole Proprietors.

But remember, you might face penalties in case you underpay or don't pay your estimated taxes before the initial deadline.

What Are the Penalties for Missing the Deadline?

What you could get for not filing or paying on time:

1. Late Filing Penalty

If you miss the deadline (or extended deadline) the IRS might charge :

5% of the unpaid taxes on every month your return is late.

Up to 25% of unpaid taxes.

2. Late Payment Penalty

In case you miss the original deadline for paying back taxes, you'll pay:

0.5% of the unpaid amount every month.

Up to 25% (maximum 25%).

3. Interest charges

The IRS also charges interest on your balance. Rates of interest vary quarterly and are compounded every day.

Common Mistakes to Avoid

It is not hard to file a tax extension, but most business people make costly blunders. The following are to avoid:

Waiting too long: Do not file till the last minute. Servers crash and mail gets delayed.

Not estimating taxes: Even when you file an extension, late payments incur penalties.

Not filing the correct form : Make use of the proper form for your business structure.

Forgetting to include the payment: Pay out your estimated taxes in time - even when you receive an extension.

Assuming an extension means you pay later: This is not true. You get more time to file but not to pay.

Can You File a State Tax Extension Too?

Yes, you can file a state tax extension in many American states, but rules differ based on state.

Several states issue an extension automatically in case you file a federal extension. Some require a separate state form. Check with your state tax department or hire an accountant.

Should You Use an Accountant?

You can file an extension by yourself, but in case your business has complex finances, speak with an accountant. They can:

Help you estimate taxes correctly.

File the proper form.

Minimize your risk of penalties.

Help with state filing requirements.

Obtaining professional help could save you a lot later.

Also read: ProSeries Tax Software Review 2025: Is It Still Worth It?

Conclusion

We all know that tax season is stressful. But filing for a business tax extension is smart if you need more time to get things right.

But remember, an extension doesn't hold up your payment. To avoid penalties, estimate and pay what you owe by the original deadline.

With over twenty million individuals filing for extensions yearly, you are in great company. Take the time to file correctly and steer clear of mistakes. Better to file an extension than to rush and get it wrong. If you have any concerns, connect with our experts at The Fino Partners.

Frequently Asked Questions (FAQs)

You must submit the appropriate IRS form by your original tax deadline to file a business tax extension in 2025. For companies, partnerships and multiple-member LLCs, make use of Form 7004. For sole proprietors and single member LLCs, make use of Form 4868. They could be filed electronically through the IRS e-file system or via the mail. Filing extends your tax return an automatic six month extension to file. But to avoid interest and penalties, estimate and pay some taxes owed before the initial due date.

Deadline for filing a business tax extension depends upon your business entity type. The original filing deadline for S corporations & partnerships is March 17, 2025 (March 15 is a weekend). For sole proprietors & C corporations, it is April 15, 2025. By these dates you must submit your extension request for the automatic six month extension. Missing these deadlines could cause late filing penalties.

Missing the business tax extension deadline could lead to penalties and interest. The IRS levies a late filing penalty of 5% of unpaid taxes on every late month as much as twenty 25% of the entire amount owed. Virtually any unpaid taxes will be liable for a 0.5% monthly late payment penalty (also up to 25%). Interest is levied on outstanding taxes from the due date. File your return and pay back taxes when possible to reduce these charges.

You can file a business tax extension on the internet. Businesses can file Form 7004 electronically through the IRS Modernized e-File (MeF) system. This method is quick and gives immediate receipt confirmation. Or you could submit an extension request via authorized e-file providers or tax software. File by the original tax deadline to avoid penalties.

Yes, even when you submit a business tax extension, you still owe taxes due in time. The extension provides you with additional time to file your return, not to pay taxes. Not paying the estimated amount could lead to interest and penalties. To avoid these charges, estimate your tax obligation and pay by the original deadline.

A business tax extension grants you an automatic six month extension to file your return. For instance, in case your initial deadline is April 15, 2025, your extended deadline is October 15, 2025. Remember that this extension is just for filing the return and not for owing taxes. Remember to pay any estimated taxes before the initial due date to avoid additional interest and penalties.

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