Outsourced CFO | Filing Taxes On Time In Order To Avoid Penalties
Entrepreneurs may believe that filing their taxes late can help them effectively deal with constrained cash flow, for a number of different reasons says outsourced CFO. Unfortunately all that filing their taxes late does is triggers penalties for business owners that make a difficult cash flow situation even worse. Business owners should always file their taxes on time whether itís corporate taxes or personal taxes, in order to help and cash flow positive in their business.
The penalties for filing personal and corporate taxes late the first time, is 5% of the balance owing as well as an additional 1% each month. If they are late filing multiple times, the subsequent years are assessed at a penalty of 10% of the balance that is owed and an additional 2% per month. Depending how much in taxes are owed says outsourced CFO, this can add up incredibly fast. Not only is is a penalty that business owners will be expected to pay, is also going to be additional interest on the outstanding balances which is 6% per year on top of the penalties. This is recently gone up from 5%, and he can make an extremely difficult time for business owners to have to pay, especially if there already having cash flow problems.
Business owners should know that their taxes are due six months after their corporate year end. As long as they keep the state in mind, they can work together with their accountant in order to avoid filing their taxes late. regardless of when there year end is, they should know that three months after that year end they start getting charged 1% interest on the taxes that they owe, and they have six months after the year end in order to file says outsourced CFO.
The personal tax deadline is April 30 for almost everyone across Canada, unless a person or their spouse has an unincorporated business. If they do, then the deadline for filing is June 15. By keeping the state in mind, people can avoid filing their personal taxes late, and also avoiding these unnecessary penalty charges. Since the threshold for proprietorship is extremely low says outsourced CFO, people may be able to claim that they have a proprietorship in order to take advantage of the later filing date. If someone has ever been able to say that they took additional money that was not to run through corporation, they should be able to claim that they have a proprietorship and then strategize how to utilize the later filing deadline to their benefit.
Filing taxes on time can be easy once a person knows the dates that they need to keep in mind, and working to ensure that they file both their corporate and their personal taxes on time. If having a hard time paying taxes, Canada revenue agency will allow people to arrange payment plans with them for personal and corporate arrears that gives them an additional six months to pay their taxes says outsource CFO.
There are many difficulties that business owners have to overcome in order to operate their business successfully, says outsourced CFO. Unfortunately, one of the biggest problems that business owners face, is running out of money in their business. 50% of all businesses are out of business within five years, and 29% of those entrepreneurs say that the reason they had to shut their business down, was because they ran out of money. Business owners have often tried to deal with constrained cash issues in their business, by delaying when they file their corporate taxes, and hopes of generating more revenue in their business in order to pay their taxes later. Unfortunately all this does is make business owners owe more money because of the penalties they incur by filing late.
The late penalties that are given to entrepreneurs who have filed their corporate taxes late is 5% on the taxes that they owe plus 1% per month. If business owners are owing multiple years, the additional years of the penalties of 10% of the taxes that they owe plus 2% per month. Outsourced CFO says that not only do these amounts add up very fast, especially depending on how much a business owner owes in taxes, but they also will be getting interest on top of that at 6% per year in additional to the penalties.
Corporate taxes are due six months after a businesses fiscal year end says outsourced CFO. Business owners can avoid penalties, by understanding exactly whalers corporate taxes are due. By not filing by that six month mark, business owners are risking triggering penalties. However, if businesses are aware that they are late, but Canada revenue agency hasnít yet found out, or at least havenít started contacting business owner to find out when theyíre going to file, business owners can do what is called a voluntary disclosure in order to inform CRA that they are late. What this does, is about CRA to know that they are aware that they are late, and business owners can promise CRA that they will file the taxes and pay the interest right away. CRA often takes off the penalties of the business owner would owe from filing late. This can be a great method for business owners who didnít realize there filing deadline had passed, as well as business owners who thought it was a good strategy in increasing their cash flow in their business, and then realized there air.
Many times, business owners believe that by filing late, they can avoid paying their taxes at the same time says outsourced CFO, however if they do need some additional time in order to pay their taxes, all they need to do is contact Canada revenue agency to arrange a payment plan. CRA can authorize up to six months for business owners to pay their corporate tax arrears, which can help business owners by the time they need to collect the money they need for taxes, without triggering penalties.