5 Questions to Ask Before Filing a Tax Extension Think you need an extension? Don't decide until you weigh the insight of our tax experts.

April 15 seems so far away. And then it comes, like a flash.

A six-month tax filing extension might seem like the best option, especially when there is a business to run. But it never hurts to think for a minute about whether that's the best option available to you.

Here are five questions small business owners should think about -- and potentially hash out with a tax professional -- before filling out a Form 4868 and sending it in:

1. Is this about paying your taxes on time, or being able to file on time? "The six-month extension allowed by the IRS is only an extension of time to file -- not an extension of time to pay. All taxes are still required to be paid by the original due date of April 15, irrespective of an extension," says Michael Raanan, a former IRS revenue officer and president of Santa Ana, Calif.-based Landmark Tax Group.

It is worth noting that the penalty for not filing on time is much higher than the penalty for not paying on time. Raanan says the failure to file penalty, which is set by law, is 5 percent of unpaid taxes for each month or part of a month that the tax return is late, up to 25 percent. It could reach half of unpaid taxes if a return is not filed and taxes are not paid on time. In contrast, the penalty for filing a return on time but not paying all the taxes is 0.5 percent of the unpaid taxes.

"Under normal circumstances, a taxpayer should never miss the filing date simply because they cannot pay the tax due on the return," Raanan says.

2. Do you have all the information you need to file? Raanan thinks the most common scenario to file an extension is when a taxpayer has yet to receive all of the pertinent documents, such as a K-1, W-2, or 1099, necessary to accurately prepare a tax return.

There might be financial information that still needs to be gathered from other business partners, says Miguel Farra, principal in charge of the tax and accounting department at Morrison, Brown, Argiz & Farra's Miami office. "There is nothing wrong in getting an extension," says Farra, and generally nearly half of his clients need to file one.

A common scenario where people have to file extensions Farra sees involves 1031 exchanges, in which someone who sells real estate defers capital gains taxes by quickly acquiring another "like kind" property inside the United States. One property may have been sold in December, but the business owner is still waiting for the related acquisition to close. The seller of the real estate has 45 days after close of sale to identify an acquisition target for the like kind exchange; the close on the acquisition needs to take place within 180 days, according to Farra.

"A hundred and eighty days [from December] basically will take you close to June 30. If by April 15 … they've identified a property but they haven't closed, you don't know whether to treat that as a like kind exchange or not. In that case you do have to extend to make sure the replacement property has closed on so you treat the property as a like kind exchange," Farra says.

3. Do you need a loan soon? Do you need to keep a banker happy? If you do, Farra says think twice about filing an extension. A recently filed tax return is often a required financial document when seeking a loan from a bank or for other forms of credit. "Any time you apply for a loan from a bank, the bank wants to see your financial statements and tax returns," Farra says.

Farra has clients, especially in real estate circles, who already have substantial loans out with banks. "The banks want to see they are compliant, that they've filed their tax returns and what they've reported. A lot of them make the push to file by the due date," Farra says.

4. What are you doing with your retirement plans? When it comes to certain types of retirement plans such as Simplified Employee Pension Plans, extending the tax filing also extends the time in which employer contributions can be made to the plan for the previous year. "One of the reasons you would extend your return is to extend the time in which you can make the contribution," says Dudley Ryan, principal at CliftonLarsonAllen in Minneapolis.

Self-employed individuals can set up an SEP plan, a profit sharing plan, for the previous calendar year until the due date of an extended tax return and make contribution to it, Ryan says. Ryan has a caveat: "If you have employees, it's possible the way the plan is written that your employees have to be included, too." He adds, "It's not for everybody. But especially if you're self employed and you want to have a plan, that's a good way to do it." Ryan suggests those considering that path to hash out the nitty gritty first with a financial planner.

5. Are you comfortable extending the statute of limitations? Think turning in a complicated tax return on time is rough? Try getting audited over it. Extending your tax return filing also extends the time frame in which the IRS might audit it, Ryan says. "If I file a return April 15, the statute of limitations for federal purposes closes three years from April 15. If I extend my return, that statute stays open until three years from the date I file. So if I don't file until Oct. 15, I have three years from Oct. 15 I could be audited. You're giving the IRS more time to look at your return," Ryan says.