Taxes are one of the few things in life you can never really escape, and that's especially true for your business. Filing business taxes on time is essential, and failing to do so can result in serious financial (and other) consequences. Discover the penalty for not filing business taxes on time, and learn how you can avoid the trouble.
If you file your business's taxes late, you can expect late penalties. Specifically, the penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. Keep in mind that the IRS structures taxes in such a way as to punish you for not filing more than not paying.
In addition to the 5% penalty, there is also a penalty for returns that are 60 days past due. For tax returns due before Dec. 31, 2015, this amount is either $135 or 100% of how much you owe, depending on which figure is smaller. This increases to $450 for returns due after Dec. 31, 2022.
In addition to having to pay these fees, your business could suffer in other ways. If you wait too long to file your tax return, the IRS will simply do it for you. When they file it, you're not going to see deductions that you could have otherwise claimed, meaning the taxes you owe could potentially be greater than what you would have to pay if you simply filed on time.
IRS penalties for your business can get considerably punitive as time goes on. They can place a tax lien on your business and even seize your assets. You may be forced to forfeit your tax refund as well. Because failing to file your business taxes is against the law, you may even face criminal charges, which could dramatically alter the future of your business.
If the situation calls for it, you can request an extension for your taxes via Form 7004. Keep in mind, however, that this only prevents you from incurring a penalty provided that you make the necessary tax payment by April 15th and estimate your total tax liability in your filing. The best strategy is to simply file taxes for your business on time and pay your taxes on time.
Knowing how to set up payroll and file taxes for a new business is essential to avoiding these penalties. Understanding how to file taxes for a new small business is a big step in establishing yourself as a proper business, so plan ahead and be prepared for tax season no matter how far away it is.
The penalty for filing business taxes late is severe, but SPLI can help make sure you're prepared. Get in touch with our team today to discover how we can offer convenient solutions for your business.