What Happens If You File Your Business Taxes Late?

Filing your business taxes late is one of the fastest ways to cause problems with the IRS.

Tax season is stressful for many small businesses in part because there are so many forms, complex processes, and deadlines. However, staying on top of those deadlines is imperative to avoid a lot of headache and the expense of costly late fees.

So, what happens if you file your business taxes late? Filing business taxes late can lead to penalties and fines. 

The consequences vary a bit from one type of business to another. Take a look at this list of potential fines for late tax filing to learn more about what you will end up paying for filing business tax returns past the deadline.

LATE FILING FOR PARTNERSHIP LLCS 

Late returns receive a $210 penalty per member per month for a maximum time period of 12 months. This amount is multiplied by the number of members. An LLC with two members will have a $420 penalty per month, whereas a Partnership LLC with five members will be penalized $1,050. 

This penalty repeats monthly, so at the end of six months, the two-member LLC would owe $2,520, and the five-member LLC would owe $6,300  in tax penalties.

Partnership LLC taxes are due by the 15th day of the tax year’s third month.

LATE FILING FOR S-CORPORATIONS

Similar to the penalty for an LLC’s late filing, S-Corporations face a $210 penalty for each month that the return is late, multiplied by the number of shareholders in the corporation. 

S-Corp tax returns must be filed with the IRS by the 15th day of the tax year’s third month. 

Related: Understanding Business Property Tax: Is There Tax Relief?

LATE FILING FOR C-CORPORATIONS

C-Corporations are penalized at an amount equal to 5% of the unpaid tax owed. 

If a C-Corporation owes $5,000 in taxes, then their monthly filing penalty is 5% of $5,000, which is $250. That's $250 per month. The maximum penalty cannot go over 25% of the unpaid tax responsibility.

The tax return for a C-Corporation is due by the 15th day of the tax year’s fourth month.

ADDITIONAL PENALTIES

Some businesses have to pay an additional penalty if they are late paying taxes. S-Corporations and C-Corporations pay an additional ½ percent (.005) of the unpaid tax amount each month that the tax payment is late, with a limit of 25% of the unpaid tax amount. This penalty is for returns that are paid late but filed on time.

HOW TO AVOID LATE TAX FILINGS

You have some options to help you avoid these stiff penalties.

REQUEST AN EXTENSION

If you are concerned about not finishing your tax preparation work in time for the IRS deadline, it’s time to request an extension. 

You will need to request an extension directly from the IRS. They let you know exactly what forms to fill out and what information you need to provide. The extension lasts for 6 months from the original filing date. 

HIRE A PROFESSIONAL TAX PREPARER

As you prepare for tax season, consider hiring a tax professional to manage your business’s needs. 

Bringing in a professional reduces your stress and also keeps the process running smoothly. Instead of trying to navigate an unfamiliar process and get everything right, you can trust a professional to do it for you. 

Related: How Can A CPA Help Your Small Business?

HIRE A DEDICATED CPA TO MANAGE YOUR BUSINESS’S ACCOUNTING NEEDS

In addition to hiring a tax preparer just for the tax season, consider hiring a dedicated CPA to take care of all of your accounting and bookkeeping needs.

When you hire a small business CPA to work with you year-round, the relationship you develop gives you peace of mind and confidence that your accounting is done right the first time.

CHALIFF + ASSOCIATES: THE SMALL BUSINESS CPA THAT WILL KEEP YOU ON TRACK

At Chaliff + Associates, we take the stress out of bookkeeping, tax preparation, and accounting. We know the ins and outs of small business filing, including how to make sure that everything gets submitted to the IRS correctly and on time! 

Looking to streamline your tax prep experience? Reach out to us today! We offer free consultations to get to know you and your business and tell you about how we can help you avoid costly penalties and mistakes. Book your free consultation today!