Let’s start from the beginning.
Do I need to file a business tax return?
You Do Need To File A Business Tax Return
Avoiding your obligation and not filing a tax return is a huge mistake. Avoid this catastrophe. It sounds simple but all businesses must file an annual income tax return. Our in-house CPA analyzes, prepares and files every form necessary. Years’ worth of back taxes filed correctly the very first time.
The forms you use depends on how your business is organized. Refer to Business Structures to find out which returns you must file based on the business entity established.
Federal income tax is a pay-as-you-receive income responsibility. As income is received throughout the year, your business is obligated to pay the appropriate tax with two ways to do so: make estimated payments or use withholding.
What Type of Tax Return Do I Need to File?
As a business owner, your form of business determines which income tax return form you have to file. The most common forms of business are:
- Sole Proprietorship
- Corporations (S Corps and C Corps)
- Limited Liability Company (LLC)
Why File Past Due Taxes Now?
Doing nothing or delaying filing your unfiled or late business tax returns makes things worse for you business.
The IRS will continue to tack on penalties and interest, which will irreparably harm your business. More extreme measures include: placing liens on your assets and garnishing your business bank accounts which literally-forces you out of business.
Why You Should File Your Past Due Return Now?
This action shows the IRS that you are serious about resolving problems and, in-turn, can begin to open up avenues of negotiation such as ‘An Offer In Compromise’ which allows you to settle your debt to the IRS for less than you owe.
HOW To Avoid Further Penalties and Interest
File your past due return now, or at least ASAP, to limit the additional accrual of interest charges and late payment penalties. Let me help you and your business with our in-house CPA (Certified Public Accountant).
It sounds rudimentary, but you risk losing your business if you don’t file your return. Claim the right deductions. If you are due any refund on estimated taxes, you must file your return to claim it within 3 years of the return due date.
The IRS will withhold all income tax refunds in cases where their records show that one or more income tax returns are past due. They will continue to withhold them until they receive the past due return or receive an acceptable reason for not filing a past due return.
Avoid Getting Turned Down on Loan Requests For Your Business
Simply put, any time you or your business applies for a loan, the bank needs your tax returns to verify income and to qualify for that loan request, whether for a new house, a business line-of-credit, or any extension of credit. Don’t be denied because you’re behind, haven’t filed or afraid to file.
Owing More than You Can Afford
Extensions and online payment plans are available but communication is key. Requesting an installment agreement or applying for an offer in compromise is often a less painful course of action for you and your business.
What If You Don’t File Voluntarily-an Even Bigger Danger for Your Business?
The IRS Files May File Their Own Tax Return on You
If you fail to file, the IRS may file a substitute return for you. This return might not give you credit for deductions and exemptions you may be entitled to receive. You will have 90 days to file your past due tax return or file a petition in tax court. If you do neither, I will proceed with our proposed assessment.
If the IRS files a substitute return, it is still in your best interest to file your own tax return to take advantage of any exemptions, credits and deductions you are entitled to receive. The IRS will generally adjust your account to reflect the correct figures.
Don’t Let This Happen To Your Business
Business tax filing and reporting is complicated. The IRS will pursue you for tax debt owed.
Avoid these common mistakes:
- Underpayment of Estimated Taxes
- Failure to File/Late Filing
- Failure to Pay/Late Payment of Penalty
- Accuracy-Related Mistakes
- Trust Fund Recovery Taxes