In last week’s blog, we discussed the five common barriers to fulfilling tax requirements for your small business. Understanding some of these obstacles helps you to determine the actions you should take to overcome them.
Equally important is being able to recognize your short-term and long-term options in order to reduce or eliminate the cost of a late-filing penalty.
Reactive And Proactive Steps To Fulfill Your Tax Requirements
In general, thinking and acting proactively is fundamental to succeeding as a business owner. You want to be strategic and think ahead in every area of your business, and your taxes are no exception. But, if you find yourself in a situation that requires immediate action, there is at least one measure to take …
The Reactive Measure In Time Of Need
If you fear that you’re going to miss a tax-filing deadline, look into getting an extension and file your returns as soon as possible. Keep in mind, however, that the extension is just a postponement to filing your tax return, not to making the payments themselves. You should still send in a payment for the estimated amount you owe. Otherwise, you could be slapped with late-payment penalties. Should you fail to pay on time, you’ll be charged interest starting from the original tax deadline.
Proactive Measures To Prevent Penalties
Let’s face it: Unless you provide tax services at your small business, it’s highly unlikely that you have the necessary knowledge to meet all of your tax requirements. Partner with a consultant who provides tax services and is up to date on all state and federal requirements. Getting support is the most effective way to ensure that your requirements are taken care of. This person should also help you learn more about what is expected of you as a small business owner.
Not all tax consultants are alike, though, especially when it comes to small businesses. Your tax preparer or consultant must be of like mind and be able to support you and tend to your finances year-round. If you two don’t think the same way, it could create some additional issues to work through, which may require more time to prepare your return and possibly cause you to file for an extension.
Speaking of filing extensions, the sooner you have your tax preparation performed for your small business, the more time you have before your deadline approaches to set aside the funds you owe.
Learning From Your Mistakes
While late-filing penalties cut into your potential profit – via fines and accrued interest on the money you owe – you should at least come away with an understanding of what mistakes you made. Don’t let tax season sneak up on you like it does with so many small business owners. Make your taxes a priority and take a proactive approach to meeting your tax requirements.
Remember: There is always a partner to support you.