Have you ever saved the most important thing on your to-do list for last? You know it’s probably not the best plan of action, and yet here you are, hitting that deadline like a brick wall with nothing to show for it. You’d be surprised at how often this happens with small business taxes.
There are lots of moving parts when it comes to running a business, and when you’re facing the extra challenges that tax season throws at you, due dates can sneak up on you. Maybe you’re trying to contact a too-busy accountant or worrying you couldn’t pay any taxes you might owe.
In CSI’s more than 50 years of working with small business owners, we’ve seen this plenty of times. We know that if you’re doing research on what happens if you didn’t pay your taxes, this is probably the first time it’s happened to you. Take a deep breath. We’ve got this.
Let’s take a deeper look into:
- What the IRS does when you don’t file
- How an accountant can help you fix things
- How to avoid not filing your taxes in the future
What the IRS Does When You Don’t File
You missed the due date for filing your business’s taxes. Now what? It all starts with the IRS sending you notices and letters.
You’ll get a 90-Day Deficiency Notice that allows you 30 days to pay the amount the IRS says they think you’ll owe. Without you filing your taxes, this is just an estimate that is typically on the higher end.
If you’re not able to pay the fee by the end of that 30 day period, the IRS can start levying your paycheck and bank account or putting liens on your property. At this point, if you still don’t pay, you’ll be living by cash and unable to refinance your house.
Don’t forget that in the meantime, interest and penalties will accrue. The penalty is five percent per month up to 25% for failing to file and an additional .5% per month up to 25% for failing to pay! The faster you get this taken care of, the better off you’ll be.
It’s also important to note that S-Corporations are the most common entity type for small businesses. When an S-Corporation files after March 15 (or September 15 with an extension), the penalties are currently $210.00 per month per shareholder. That can really add up!
The longer you wait, the worse the consequences get. Download our free eBook, The Consequences of Falling Behind on Accounting and Taxes, here. Want a partner to help you through this? It’s time to talk to an accountant.
How an Accountant Can Help You Fix Things
A monthly accountant is the way to go to get back on your feet. It all starts by tackling your back taxes. A monthly accountant will get your books updated and file your tax returns. You can even get multiple years of back taxes filed at once, if this is something you need.
After your taxes are filed, it’s time to pay the amount that you owe. If you’re worried about not being able to afford a large sum, keep this joke in mind; How do you eat an elephant? One bite at a time.
Depending on the amount you owe, your accountant can then work with the IRS to get you a payment plan that spans over several years. It’s an automatic acceptance if you owe under $50,000, and if you owe more, you can still apply and have the IRS determine your payback schedule.
Once this plan is in place, the IRS will stop sending you notices.
How to Avoid Not Filing Your Taxes in the Future
How do you keep this from happening again? The answer is simple; work with a monthly accountant.
If you work with a company like CSI Accounting & Payroll, you can expect year-round advice and financial statements with hands-on work in your books. Plus, it’s hard to miss deadlines when you have unlimited communication and monthly meetings with your accountant!
Also, don’t underestimate the power of getting a tax projection! This helps eliminate the surprise when you find out what you’ll owe in taxes. You can plan accordingly in the months leading up to it and even make quarterly payments.
Ultimately, when your taxes are filed on time, that means your accounting is accurate and up-to-date. (And that’s the best place to be!)
File Your Taxes the Right Way: On Time!
Whether you were overwhelmed with tax season challenges and missed the tax filing deadline or you were afraid that you’d be unable to pay your taxes, you’re taking the first big step in the right direction by researching what happens next. (Yes, seriously.)
CSI’s experience with small business owners in the same boat has allowed us to gain knowledge on what the IRS does when you don’t file and how we can help you get caught up and avoid future mistakes.
If this sounds like something you’re ready to have a discussion about, you can click the button below to schedule a free consultation!
Otherwise, if you’re not sure if your business is right to work with CSI Accounting & Payroll yet, that’s also an important step to take. You can see if we’re a good match here.