Last-minute panic: How to handle almost forgotten deadlines
There’s nothing like the panic of almost forgetting an important deadline. You go into a frenzy, frantically rushing and rearranging your day while you kick yourself internally.
“How could I forget about this?” “I don’t have the time to deal with this.” “If I’d thought about this sooner instead of procrastinating, I wouldn’t be so stressed about it.”
Listen, we get it.
Cut yourself some slack.
As business owners, we have a lot going on. Most of us are full-time employees within our businesses, wearing multiple hats.
Our lack of time is why we must be proactive when planning for tax deadlines, permit applications, and debt payments, to name a few items.
This article will give some practical tips on keeping track of the many recurring deadlines businesses have to track. By the end of this article, you’ll walk away knowing you may never have to feel that feeling again.
List every deadline
If you don’t know your deadlines, you’ll step into each day with fear and anxiety. The simple solution is to chart all your taxes, licenses, records, and other deadlines as soon as they come in.
The first thing you should find out is your business structure. If you know your business structure (LLC, S-corp, sole proprietorship), you’ll have clarity and can manage your tax deadlines. Small business taxes can be tricky, but you can make them less daunting by setting yourself up for success early.
There are four tax deadlines every small business owner should know about:
- Federal Taxes: Many business owners are surprised to know that they'll have to pay taxes quarterly in addition to their federal returns due on April 15th. Ask your tax professional if you’ll owe estimated payments to the IRS.
- Employment Taxes: If your business has employees, you’re responsible for withholding, depositing, paying, and reporting employment taxes. Payroll taxes are also sometimes called payroll taxes. Your tax duties include federal income tax, social security, medicare, and federal unemployment.
- State Income Taxes: States have separate tax deadlines from the federal government. For most states, the date is April 18th. Currently, nine states have zero income tax. In addition to state income tax, track renewal dates for business licenses.
- Excise Taxes: Excise taxes are taxes on various goods, services, and activities. Excise taxes are usually imposed on fuel, airline tickets, heavy trucks, tires, tobacco, and other goods. Excise tax is NOT the same as sales tax.
- Sales Tax: 45 states require that you pay sales taxes. This means you may owe taxes if you sell at least 1 product or good.
| Pro Tip: Keep a master list of every deadline and commit to adding new deadlines to this list. Make a zero-tolerance pact with yourself to stay on top of it.
You can create your calendar or use a tool like ComplYant to keep track of important dates and receive automatic reminders.
Keep extensive records and update them frequently
Setting yourself up for success means having your records in an easy-to-find location. You’ll need these documents to make your payments, update licenses, prove your ownership, and update them as things change. The last thing you want is for the week of April 15th to sneak up on you when you’ve made zero progress on your taxes.
Generally, every business, regardless of structure, should keep these records handy:
- IDs: Your business will receive various identifiers in its inception and thereafter. Examples include your business's legal name, EIN, articles of organization, and tax ID numbers.
- Accounting Records: Keep records of your past tax returns, quarterly tax filings, bank statements, and incoming and outgoing invoices.
- Legal Documents: Your formation documents will vary on your business structure. Legal documents will show that you own your business, should you ever have to prove it.
The time it takes to prepare documents is the primary roadblock for business owners when paying taxes. You'll benefit from any time you can shave off this process by preparing ahead or setting up helpful systems.
Make estimated payments
Many business owners don’t know that they’ll owe estimated payments in addition to yearly payments. Here’s the rule: If you owe more than $1,000 in taxes for the quarter, you should make estimated payments each quarter.
Estimated taxes are paid in four (4) payments over a tax year. Payments are due based on the following schedule:
- January 1 to March 31 – April 15
- April 1 to May 31 – June 15
- June 1 to August 31 - September 15
- September 1 to December 31 – January 15 of the following year
Note: If these due dates fall on a Saturday, Sunday, or a legal holiday, payments are due the next business day.
What you owe in estimated payments will vary from quarter to quarter, so update your P&L statements weekly or monthly, so you don’t fall behind.
Understand the penalties and possible extensions
Sometimes, putting an exact number to the possible tax penalties you’ll face for late filing is sufficient motivation. For example, if you know you’ll pay an additional $250 every month you fail to file your federal income tax, you could equate that to a nice dinner or plane ticket.
Then it hurts!
What happens if you don’t have the money to make a full tax payment? Know that the IRS understands and recognizes unforeseen circumstances in life and business.
Here’s what you should and should NOT do:
First, don’t fall into the mindset that you’re doing yourself any favors by ignoring the IRS until you have the money to pay.
Instead, do this on or before the tax filing deadline:
- File your taxes by the assigned due date for your business type.
- Pay all or as much of your taxes as possible on the filing and payment due date. Understand that the deadline to file AND to pay is always the same day.
- If you cannot pay your tax obligation in full, see if you qualify for a monthly payment plan by attaching Form 9465, “Installment Agreement Request,” to the front of your tax return.
On the permits and licensing side, your business can face heavy consequences for operating without proper licenses. Believe it or not, some consequences may be more extreme than the penalties you’ll typically face from the IRS for filing late.
One of the challenges of owning a small business is the constant barrage of deadlines required to be in good legal and financial standing. There’s no sidestepping your obligations, so you might as well devise a plan that will save you time and stress and help you avoid penalties.
ComplYant exists to help business owners avoid the tax stress and complication of deadlines. Our core mission is to free up small business owners to run their businesses by simplifying how they track their small business tax deadlines. The only solution to the last-minute panic of almost missing deadlines is to plan, and ComplYant has a full suite of tools to keep you up to date on your filings.