Even business owners need to file their individual taxes. But if you get an extension and aren’t working with a year-round accounting service, you won’t know for sure what you owe by the payment deadline, which is not extended.
So, how can you confidently pay your taxes to avoid penalties, interest, and a huge headache? In this article, I’ll tell you the answer.
At CSI Accounting & Payroll, we’ve provided monthly accounting services to small businesses for 60 years. That means we’ve seen plenty of prospective clients who are confused about extensions and want to know:
When you file for an extension, you get an additional six months to file your taxes. It can be a good thing because it removes the failure to file penalty! However, you still need to pay your taxes by the original April 15 deadline. If you miss this deadline, you’ll pay penalties and interest… and they can really stack up.
One more thing. If you think you’re going to owe money, avoid filing an extension at all costs. If you give any accountant everything they need with some time to spare, they should be able to file your taxes by the original deadline.
If you still need an extension for any reason, I’ll tell you how much to pay in the next section.
It can be overwhelming to try to pay when you don’t know what you owe. What if you get it wrong?
Your accountant should be able to estimate what your tax liability is by comparing your prior tax returns to your most recent year, but they won’t know for sure until you file.
The experts at CSI recommend paying a little bit more than your estimated taxes. Why? Estimates aren’t guarantees, and this gives you a cushion so you end up somewhere in the “safe zone”. If you underpay only slightly (at least 90 percent of what you owe), the IRS typically won’t charge a penalty. If you overpay slightly, you may end up waiting for a refund, but it’s typically preferable to interest and penalties.
Not sure what’s best? A monthly accountant can offer personalized advice as part of a complete tax strategy. Let’s talk more about how CSI handles extensions in the next section.
When you partner with CSI Accounting & Payroll for our monthly accounting services, we keep taxes in the back of our minds all year long to legally minimize what you owe.
As part of a complete tax strategy, our clients get something better than estimated taxes: They also get tax projections! Know what your tax liability is months in advance and never get caught off guard by a large tax bill from the government again.
Better yet, if a client is responsive and provides all of the information we request before the tax deadline, the odds of CSI needing to file an extension are very low. It’s our goal to have no extensions each year.
Already filed an extension this year? No problem! We can still take you on as a client.
Learn more about how CSI makes tax time feel calmer here.
Now that you know how an extension changes your tax filing and payment processes, how you should pay slightly more than your estimated tax liability, and how CSI deals with extensions, are you ready to check out monthly accounting services with CSI?
To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, learn what your monthly accounting investment may look like by clicking the image below: