The July 15th tax deadline has come and gone, and business owners everywhere now fall into two categories: Either you filed your taxes, or you got a tax extension. If you’re part of the group that got an extension, you may be inclined to forget about the issue until the next deadline starts looming. Don’t do it! Rushing your taxes always equals money left on the table, so make sure you give yourself (and your bookkeeper or CPA) the time you need to be successful.
If you secured a tax extension for your business, here are a few dos and don’ts you’ll want to abide by during the extension period:
Don’t Wait Around
If you’ve filed Form 7004 or Form 4868 and obtained the automatic extension to October 15, it would be wise to still work to file your taxes as soon as possible. For many businesses, the fall is “busy season” as you ramp up for the holidays and work to close sales before the end of the year. Your taxes are the last thing you want to be worrying about during this time. Plus, you won’t be able to get another extension if you wait until the deadline again. So, don’t wait: File your taxes as soon as you can even if you technically have until October.
Don’t Miss The New Deadline
Take it from us: You do not want to miss the tax deadline, whatever that date is for you. The consequences for filing late or not filing at all can be severe, depending on the circumstances, and you could owe the IRS hundreds of additional dollars. Penalties range from 5% of unpaid tax required to $435 for returns due on or after 1/1/2020, depending on your circumstance and when you file. Make sure to mark that new deadline on your calendar in big red letters!
Do Get Your Deductions In Order
The whole point of a tax extension is to give you more time to sort out your paperwork. Use this extra time wisely, and discover what deductions you can and cannot take, what credits you can claim, and what expenses really qualify as business expenses. Even if it takes extra time to find that information and hunt down the receipts, the windfall you may be able to receive on your return will be worth it. (And if that sounds like a lot of work—we can help.)
Do Pay Your Taxes
We can’t stress this enough: Even though you got a tax extension, you still have to pay your taxes at the same time as always. It’s something of a misnomer, but the “extension” is only for filing your taxes, not for paying them. As a small business or self-employed individual, you pay taxes on a quarterly basis, and this hasn’t changed. You’re just getting extra time to sort out your deductions, improve the accuracy of your return, and get your documentation in order. So make sure to pay your taxes on time even if you have a filling extension.
Even if you’ve secured a tax extension for yourself or your business, we recommend filing your taxes as soon as possible. October may feel like a long time away, but you won’t want to wait until your busiest season of the year to also worry about filing. Get in touch with our team of integrated experts today to get this off your plate sooner rather than later, and we’ll work to minimize your taxes as much as is legally possible. Contact us today to get started.