If you’re reading this, chances are you missed the tax deadline in New York and are scrambling to figure out what to do next.
It’s no secret that clean tax records are a must for any business, but the unfortunate truth is that these files are often swept to the wayside in favor of other business operations. Indeed, scrambling last-minute to gather all the necessary paperwork for tax season is a problem many small business owners are all too familiar with.
Time is of the essence when it comes to tax payments, so keep reading to find out more about what to do when you missed NY tax filing.
What Are the Penalties?
What happens when you miss taxes in NY? The simple answer is that it depends on your situation: to start, there are no penalties for those who are owed a refund. As long as you submit your form within three years of the filing deadline, you will get your refund.
However, there are no exemptions for anyone who does owe taxes. The harsh truth is that there are no extensions given for cases like these, which is why it is so important to get your tax filed as soon as possible. Paying sooner rather than later may help minimize penalty fees.
There are two main penalties you need to be mindful of:
- Failure to file: This applies to returns filed after the due date or extended due date, unless there is a reasonable reason for the late filing. The combined penalty is 5% or each month or part of a month your return was late, with a maximum penalty of 25%.
- Failure to pay: This penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25% of the unpaid tax from the due date of the return to the date of payment in full.
What Do I Do Now?
As seen above, your penalties will continue to stack up the longer you take to file your taxes. Aside from preparing your financial documents, here are some key things to look out for when you’re preparing late tax filings:
Your Transaction History
Beginning on the first day of the tax year and continuing back to January 1, you must record and categorize all business transactions. The important thing is to keep track of the amount, the category it belongs to, the date, and a brief description of the transaction.
Your Invoices
Your Books
How Do I Avoid This Problem in the Future?
As a business owner, you’ll need to keep in mind that you’ll be paying taxes on your self-reported net profits.
Any reputable tax prep company in NY will recommend that you set aside between 25% and 30% of your net business income to ensure you have the funds necessary to pay your federal income taxes.
If your company generates a steady stream of revenue, you can easily set up automatic bank transfers to transfer money into a secondary savings account on a regular basis from your main checking account.
Otherwise, New York businesses that are built on closing large projects should develop the practice of performing these transfers manually each time you get payment from a client.
Get Prepped for NY Tax Season With Us
Last but not least, working with the best tax prep company in NY can certainly make sure your documents are always filed on time.
At Melanin Tax, we offer tax preparation services in NY that help drive business growth. Our goal is to help small business owners easily navigate all things tax-related, as these are crucial components of any sustainable operation.
If you have any other questions about how our tax preparation service can help you, contact the Melanin Tax customer service hotline at 347-943-6772 today.