In this article, I cover the 3 critical actions to meet tax deadlines to make sure that you the business owner, are setting yourself up for success.
How can business owners use tax deadlines to their advantage?
Money in your pocket may be of better use than money in someone else’s pocket, in this case, the government. Knowing the rules and deadlines can make a difference.
I am asked about filing deadlines, paying tax, penalties and what choices are available to take advantage of the tax laws.
Tax Deadline Number 1: March 15
Barbara was in a panic. Her bookkeeper was sick, overworked and wasn’t sure if she could get Barbara’s corporate bookkeeping complete before the March 15 deadline for Barbara to get her taxes done.
Barbara called her tax professional…and I calmly talked to Barbara and let her know that because she was an S Corporation there were not taxes to pay and that the March 15 deadline could be extended to September 15.
I also knew that Barbara would have to file her personal income tax return by April 15.
I asked Barbara if she thought she would owe tax based on how this year compared to last year. Barbara thought she might owe some taxes. If so, then I told Barbara while she can extend the filing of the business and her personal tax return she would have to pay whatever tax she thought she might owe by April 15.
Otherwise, she could incur unnecessary penalties that simply cost money. That is not good money management.
Barbara also asked about the $800 she has to pay every to the State of California. U explained that for the benefit of being a corporation the State of California asks for a minimum of $800 even if you make very little money.
I also explained that Barbara had a choice.
She could pay the $800 by April 15. If she did that she wouldn’t have to pay a penalty. If she didn’t the penalty would be around 32 dollars. This meant that Barbara had the choice of keeping $800 in her pocket and paying 32 dollars extra next year or paying the $800 now. It is simply a cash flow question.
Tax Deadline Number 2: April 15
As most people know, April 15 is the deadline for filing tax returns for individuals. The same principles apply as just discussed above.
If you are not ready you can extend the filing date to October 15.
If you owe tax that tax should be paid by April 15 or you will incur penalties and interest. If you are getting a refund (paying extra money to the government for no good reason) then filing as quickly as possible is beneficial.
Sometimes, people are waiting for tax information from partnerships and limited liability companies.
The law has changed and now these returns are due March 15 rather than April 15 so it should be easier for you to receive the necessary information before you have to file your personal income tax return.
Individuals also can take advantage of contributing to their regular IRA or their self employed plan if they are operating as a sole proprietor by April 15. This extra time is valuable for individuals and business owners to make last minute adjustments that might lower their taxes.
Tax Deadline Number 3: Estimated Taxes
Estimated taxes are money that you pay to the government in advance for what you estimate your tax to be in order to avoid penalties.
The estimated taxes are due on April 15, June 15, September 15 and January 15 of the year after but applied to the prior year.
The rules relating to whether you will incur penalties are complex and should be discussed with your tax professional to figure out the optimum amount that you should pay to avoid penalties but no so much that you are robbing yourself of your own dollars for use.
Tax laws don’t care who you are. They can and should be used to your advantage wherever possible. Take some time and do proper planning with the tax professionals at Business Growth By Design and keep more of what you make.
Take the Stress Out of Meeting Those Tax Deadlines
Take action by creating a long-range plan for your business that will help you keep more money in your pocket rather than the government’s.
Set up a meeting with one of our tax professionals and discuss ways to position your company for success by giving us a call at (760) 579-0079.
Or you can contact us >>HERE<<
Unless your situation is very straightforward we are well positioned to find ways that will more than compensate you for the time and cost you spend with us.