Successfully running a small business demands attention to a variety of needs. Where do your tax-filing requirements fall on that long list?
Fulfilling your tax needs and addressing the requirements of your small business is key to avoiding late-filing penalties. Even so, many business owners suffer from a lack of attention to their taxes.
The Basics Of Meeting Your Tax Requirements
While every small business has general needs regarding taxes, your individual requirements depend on the state in which you operate. Because requirements vary from state to state, researching the specifics of your local government or getting small business tax help is paramount.
That being said, the most common tax areas you need to focus on are:
- Income tax
- Payroll tax
- Sales tax
Beyond the many tax elements that you have to address, you must also know your tax deadlines, how to pay them and to whom. The two tax requirements that small businesses most frequently fail to meet are:
- Filing on time
- Paying on time
Why does this happen?
What’s Stopping You From Meeting Your Tax Requirements?
Small business owners face many challenges. These five specific ones prevent you from fulfilling your tax requirements:
- Limited tax knowledge
- Poor record-keeping
- A lack of year-round attention to taxes
- Not enough time to lend to taxes
- A shortage of money
Some of these barriers are able to be resolved in short order, but others take a strategic shift. Realistically, minimizing your tax burden and meeting all of your requirements must be a priority. Unfortunately, many business owners fail to understand the importance of year-round tax support.
Record-keeping, for instance, is a daily task. Without comprehensive records, you or your small business tax consultant simply can’t take advantage of opportunities to save. Sure, most business owners would rather focus their attention elsewhere, but the most successful small businesses are run by owners who prioritize the task of tracking their finances and taxes on a consistent basis.
Of course, you might not have sufficient cash on hand when your tax deadline arrives, but don’t let that stop you from meeting your requirements. It is far better to file your return without the money that’s due than to skip the filing altogether.
The Consequences Of Unfulfilled Tax Requirements
No specific, unmet requirement comes with greater penalties and fees or more severe consequences than another. Your penalty is determined by how much you owe and how late you’ve filed your taxes. The more you owe and the later you file, the more severe the penalty is.
The IRS is far less forgiving when it comes to late or delinquent payroll tax payments than they are with other kinds of tax payments. This was never your money to begin with – it was withheld from your employees’ paychecks. As opposed to other areas of small business tax, payroll tax is an area in which the IRS is much less likely to negotiate and much quicker to enforce tax penalties.
What steps should you take to ensure that you meet all of your tax requirements? Stay tuned for next week’s blog: Take Action To Meet Every Tax Requirement For Your Business.