If you own an LLC and didn’t file your taxes on time, you may wonder what happens next.
The answer is simple: if you don’t file your LLC tax return, the IRS will charge you fees. If you don’t pay your tax bill on time, you’ll also have to pay fines and interest. Both of these penalties for business income tax start the day after your return is due.
Most people don’t want to file their taxes late on purpose, but there are many good reasons why you might have missed the deadline. Even though the IRS knows there are sometimes problems and is willing to work with companies to help them pay their taxes, they are very strict about deadlines. Even if you can’t pay your taxes, you should file your tax return as soon as possible.
how does the IRS determine the fines for LLC’s that don’t file taxes?
When you file your LLC taxes, you have to do two things. The first step is to file the tax return. The second is paying the taxes that are due. If you don’t do these things by the deadlines set by the IRS, you’ll be charged with two different penalties.
what happens if you don’t pay your taxes?
If you don’t send your tax return to the IRS by the due date, the agency will charge you 5% of the taxes you haven’t paid every month until you do. The total penalty will be at most 25% of the taxes you owe, though.
If you don’t file your tax return within 60 days of the deadline, you’ll have to pay at least $210. If what you owe in taxes is less than that amount, the penalty is 100% of what you owe in taxes.
not paying your taxes is a crime.
If you file your federal tax return paperwork but can’t pay your tax bill on time, the IRS will charge you 0.5% of your unpaid taxes every month until you reach the maximum penalty of 25%.
If you don’t file your tax return and pay any taxes you owe by the due date, you can be charged a maximum of 5% per month for both of these things. Penalties will always be at most 25% of the tax bill for the year, no matter what.
The more you wait to file, the more you’ll have to pay penalties. Also, it is a federal crime not to file and pay your LLC taxes. The IRS has a set schedule of administrative penalties for filing late, but the longer you wait to file, the more likely you will face civil or criminal penalties for not paying on time.
what to do if you can’t pay your LLC taxes on time
LLCs, which stand for “limited liability company,” can choose how to file their taxes. Your LLC will default to be taxed as a sole proprietorship or partnership. Any money your LLC made will “pass-through” to your finances and be counted as self-employment income on your tax return. Every year, on April 15 (or the next business day if the 15th falls on the weekend), you would file your LLC’s tax return.
You can choose to be taxed instead of a corporation. If you decide to give your LLC corporate status, you must file a corporate tax return by March 15 each year.
As an LLC, you must also pay estimated taxes every three months, on April 15, June 15, September 15, and January 15. You may have to pay more penalties if you don’t pay your estimated taxes every three months.
If you know ahead of time that you won’t be able to meet the tax deadline, whether it’s April 15 or March 15, you have some options to help avoid penalties.
You can ask the IRS for a business tax extension if you need to clean up your books, deal with things in your personal life, or have other problems that will make it impossible for you to file your taxes on time. Fill out and send in tax form 4868 to ask for an LLC tax extension. The IRS knows that there may be a good reason for filing late.
With the extension, you’ll have six more months to finish and send in your LLC tax forms. It’s important to know that if you file an LLC tax extension, you have six months to send the paperwork without getting in trouble. The IRS still wants you to pay your tax on time.
If you’ve been making quarterly tax payments throughout the year, you should make your final payment by April 15 to avoid late payment fees, which start to add up after that date, even if you’ve been given an extension to file your taxes.
Once you’ve asked the IRS for more time to file your taxes, use that extra time wisely. To avoid being in this situation again, you should organize your receipts, clean up your accounting, and develop a financial system that will make it easier to keep track of your money in the future.
If you don’t file your tax return by the new deadline, you will be charged the same late fees you were hoping to avoid.
what to do if you‘re late on your LLC taxes
If the deadline for filing taxes has already passed, you can’t ask the IRS for more time. The IRS gave you financial penalties the day after you were supposed to file your taxes, so if you didn’t, the clock was ticking, and your tax bill was going up.
You can stop these things if you take charge of your tax situation and pay your back taxes as soon as possible. If you work with the IRS in good faith, they might let you get out of paying a tax penalty.
why should you pay taxes that you owe?
If you’re way behind on your LLC taxes, you might be tempted to wait it out and hope it goes away. The bad news is that it won’t go away.
If you don’t send in your federal tax return or pay your LLC taxes, the IRS will figure out what they think your taxes should be. If you don’t pay the penalty amounts that the IRS says you should, you could also be charged with a crime.
If you don’t file your LLC tax return, the IRS will use a “substitute for return” to figure out how much it thinks you owe. A substitute for return adds up how much the IRS thinks you owe in taxes based on your bank account records, wages you’ve paid to employees, and payments you’ve made to contractors.
The IRS figures out how much you owe based on your income. This means that they say you owe much more than what you owe. That’s because their calculation doesn’t consider any of your expenses, tax deductions, or tax credits that you might be eligible for. If you don’t file a tax return, even if it’s been years, and you pay what the IRS figures, you could be paying a hugely inflated amount.
When you file your back taxes, two things happen. First, you stop paying the failure-to-file penalty, the more expensive the two IRS penalties. Once you’ve filed your taxes, even if they’re late, you won’t have to pay the 5% late filing penalty anymore.
The second thing that happens when you file LLC back taxes is that you can tell the IRS how much you owe in taxes and fees. This number is different from what the IRS thought it would be.
When you file your taxes, you can include the tax deductions and credits you’re eligible for, which can lower your tax bill by a significant amount. This number will be much lower than the tax amount that the IRS calculated as a substitute return. The corrected tax amount will also be used to calculate any penalties you’ve gotten, lowering the total amount.
how do you start?
Trying to get your taxes back under control can be scary if you’ve let your taxes get out of hand. But you must keep your books in order before filing your taxes. To get back in control of your taxes, you must enter your receipts, payments, expenses, and other business-related financial information. This will help you figure out how much tax you owe.
Once your books are up-to-date with the correct financial information from previous years, it’s easy to file your tax return. You’ll have all the right numbers at your fingertips.
But sometimes, it can be hard to sort through all the financial documents and numbers piled up over a long time. Many business owners find that working with an expert makes this process go faster and makes them feel more at ease.
what happens if you don’t send in any taxes?
If you don’t file your taxes, the IRS will get more and more direct about telling you about it. The IRS will only use regular mail to get in touch with people. Beware of any threatening phone calls or emails about taxes.
you’ll get reminder letters.
The first thing you hear from the IRS will be a simple letter reminding you that you owe taxes. This letter will tell you the penalties and how to get in touch with the IRS to let them know you plan to file and pay. You can count on getting more letters until the problem is solved.
you will start getting fined.
You’ll get fined immediately if you don’t file or pay. When the IRS talks to you again, they will mention these growing penalties.
your property could be taken away.
If you don’t file for a long time, the IRS may decide to take what they can from you to get their money. The IRS will put a tax lien, which is a claim of ownership, on your business property or other business bank accounts to get the money you owe in unpaid taxes.
The IRS will do your paperwork.
The IRS will file a substitute return if you have yet to file your LLC taxes in two or three years. This return won’t have any deductions, credits, write-offs, or exemptions, so the tax and penalty bill will be considerable.
there could be legal trouble.
The IRS has made it a crime to refrain from filing and paying taxes in several ways. If you don’t pay your taxes on purpose, you could face federal charges leading to up to five years in prison and a $250,000 fine.
how can Countick help?
To file your taxes, you must ensure your books are up to date. Countick can help with this. We’re the most extensive professional bookkeeping service for small businesses in the United States. As professional bookkeepers, we can take care of the numbers and tax filings so you can focus on running your business instead of filling out IRS paperwork.
If you need to catch up on filing your taxes, our bookkeepers can help you clean up your books quickly so you can file missing tax returns, stop paying penalties and get back in good standing with the IRS.
We’ll help you determine how much of your income is taxable, find all the tax deductions and credits you’re entitled to, and lower your tax bill. We’ll also set you up for success in future tax years. We can even help you fill out your tax forms.
conclusion
Life happens, and deadlines fly by even when we want to do the right thing. If you are close to or have already missed the LLC tax deadline, taking action is still a good idea.
Do the work to file your back taxes. You can lower the number of penalties you have to pay. You’ll get your books in order. And you’ll be ready to pay and file your taxes.
