Most small business owners loathe the tax paying process. The only thing worse than the process is to find out that because of mistakes you made, you will now owe more money than you had intended. Sometimes these penalties can wind up costing you thousands of extra dollars aside from what you had calculated for the year. Mark Dicus & Company is here to talk about a few of the most common mistakes that small businesses make that end up costing them in penalties every year.
Penalty for Filing Taxes Late
If you are running behind and will not meet the deadline to file your taxes, you will want to ask for an extension to help you avoid a 5% penalty for each month you are late. If you are making payments on taxes you owe, it can be up to 25% of the money that is owed in penalties. Using a the form 4858 for a sole proprietor or form 7004 for a corporation, you can ask for the extension that you need. If you are granted the extension that you are asking for, you will still have to pay the same amount of taxes, but you will have the extra time that you need to get it all in order and put together. If this happens to be the first time that you have made this mistake and the deed has been done, you can usually get a first time penalty abatement to help you out. If you are committing this mistake year after year, you will not get any compassion from the IRS.
Penalty for Not Paying Estimated Taxes
When you own a small business, the government is expecting to have proper estimated taxes paid throughout the year. When they don’t get the money when they want it, it can wind up costing you. The real problem with this penalty is the fact that it isn’t just a flat fee. The amount of money you will owe will depend on how late the taxes they were expecting were and what the interest rate at the time was. To avoid this problem, it is important that you are paying your estimated taxes on a quarterly basis. When you forget these estimated taxes, there really isn’t anything you can do other than to pay up and remember to pay on time next year. If you haven’t filed yet, you can always try to include form 2210 with your tax return that has an explanation attached as to why you didn’t pay and hope they waive the penalty.
Tax Preparation, Filing & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
Tax mistakes can be more than frustrating. If you are just getting started in the journey of owning your own small business, it can mean big trouble for your income. At Mark Dicus & Company, we know how important it is that you don’t have to pay any more money to the IRS in penalties and will ensure you’re set up for taxes. Call us today!