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Missing a tax deadline cost my small business $600 and convinced me to finally hire a CPA


sarah sharkey

Summary List Placement

Tax season is easily my least favorite time of the year. I’m in my mid-20s, so I’m fairly new to filing my taxes. But it is a process that I have come to dread. 

Personally, the idea of messing up a tax form has always been the stuff of nightmares for me. So when I missed a deadline on my tax filing last year, my discomfort with tax time was pushed to the next level. 

Different deadlines for different filings

When I filed my taxes for the first time, I was a fresh college graduate. I had just started my first “real” job, and my W-2 income was fairly simple to deal with in terms of tax filing. I was nervous about the process, but I was able to sort everything out.

Last year, though, things changed. I started my own business as a freelance writer and chose to set up my business as an LLC that’s taxed as an S corporation. I made this decision based on careful research and advice from someone I trust. 

Once I set up the business, I knew that I needed to be diligent about tracking my income. Taxes need to be paid on all kinds of income. So I knew that I’d be on the hook for a tax bill for my business. 

Throughout the year, I carefully documented all of my freelance income and kept track of my minimal business expenses. Although my business runs with very low overhead, there were still some expenses to consider, like a new computer and reliable internet. 

At the end of the year, I collected 1099s from my clients. Since I now had to file taxes for my business in addition to my personal taxes, I decided to work with a tax professional. Unfortunately, I approached them in April — which was after the tax filing deadline for my LLC.

I soon learned that the tax deadline for S-corps is March 15, not April 15 as it is for individual tax filers. 

What happens if you miss a tax deadline

When my taxes were filed in April, I didn’t think too much about it. Honestly, I didn’t even realize I had missed the deadline until June when I received a notice from the IRS in the mail. 

My first thought was to panic. In general, I’m a rule follower, so missing such an important deadline was not only panic-inducing but also a little embarrassing. 

Of course, my next thought was to figure out how to pay the penalty. 

Luckily, I had enough cash safely tucked away in my emergency fund to cover the $600 expense. But the process of paying for the fee was more complicated than I expected. I spent at least an hour on hold with the IRS before someone took my call and explained the process. Eventually, I was able to pay the fee and put this miserable chapter behind me. 

Lessons learned

Now that tax time is here again, I’ve taken a more proactive approach. …read more

Source:: Business Insider

      

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