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When to File an Extension vs. When to File on Time

As a law firm owner, tax season isn’t just a deadline—it’s a decision point. Whether you’re running behind on your books, waiting on K-1s, or just unsure if you’re ready to file, one question always comes up:

Should I file my law firm taxes now—or extend?

The answer isn’t always black and white. And making the wrong call could cost you in penalties, interest, or missed opportunities for planning.

This post breaks down when filing on time protects your bottom line—and when an extension is the smarter strategic move.

First, Let’s Be Clear: An Extension Isn’t Extra Time to Pay

One of the most common tax myths is that a filing extension gives you more time to pay your tax bill.

False.

Filing an extension gives you more time to file the paperwork—but your payment is still due on the original deadline (March 15 for S Corps/partnerships, April 15 for most solos and LLCs).

If you underpay, you’ll owe interest and potentially penalties even if you extend.

So whether you’re filing now or later, accurate mid-year tax estimates matter (and we can help with that).

When You Should File On Time

Here are common signs you should aim to file by your original due date:

1. Your Books Are Clean

You’ve closed out 2025, your financial reports are ready, and you’ve reviewed them with your CPA. No major corrections needed? You’re greenlit.

2. You Owe—and You Want It Off Your Plate

If you expect to owe, filing on time lets you make the payment and move on. Extensions can create unnecessary stress if you’re ready now.

3. You’re Applying for a Loan or Refinance

Banks often want to see your latest tax returns. A delay could slow down credit approvals or interfere with SBA loans or financing.

4. You Want a Refund (Rare for Firms, But Still)

If you’re due a refund (like from overpaid estimates), filing early gets you your money faster.

When an Extension Makes Strategic Sense

Here’s when filing an extension is the smart move—not procrastination.

1. You’re Still Cleaning Up Your Books

If your reconciliation or expense categorization is behind—or your IOLTA needs serious attention—it’s better to wait and file accurately.

Pro Tip: File the extension on time. Then get professional help cleaning up your books so the IRS doesn’t spot errors that raise red flags.

2. You’re Waiting on K-1s or 1099s

If you’re in a partnership, receive income from other businesses, or have late-arriving investor paperwork, it’s safer to extend than file with incomplete data.

3. You Want to Maximize Deductions or Plan Smart

Sometimes it’s worth buying a little time to: