For a small business owner, waiting until the last minute to file your taxes sets your business up for the possibility of gross error. When you’re pressed for time, you’re likely to miss things, including necessary documentation your tax professional needs to capture all of your deductions. Even more important, you’re more likely to make mistakes that could either cost you your refund or worse, result in owing Uncle Sam.
The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month a tax return is late. That penalty starts accruing the day after the tax filing due date (IRS Facts on Filing Late). According to the IRS, “If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date.”
Walking into your tax professional’s office after April 1st is like showing up to participate in a triathlon and you haven’t trained at all leading up to it. You’re not going to be prepared and your performance is not going to be pretty. Avoid this all-too-common nightmare by reaching out to your tax professional today. If your tax situation hasn’t changed from the prior year, it will be a breeze letting your tax professional know that things will be relatively similar. However, if things have changed for you personally or for your business, it would be ideal to afford yourself the time to discuss these changes with your tax professional.
If you’re unable to file your tax return on time, absolutely file an extension. Filing an extension will not help you avoid penalties or interest if it’s determined that you owe, but it will help you avoid the late filing penalty and give you more time to get your ducks in a row. For taxpayers with due dates of March 15th and April 15th, filing an extension will allow you until September 15th and October 15th respectively, to file your return. However, for next year, planning ahead to file your taxes will save you money, time and a headache.
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