Outsourced CFO | How To Avoid Filing Taxes Late
Filing corporate taxes late is extremely ill-advised for all business owners says outsourced CFO. There may be many reasons why a business owner would file their taxes late, but they should know that the penalties associated with planning late, are not worth any of the perceived benefits they may have. Not only is finally going to bring more problems the business owner, literally no reason that it benefits a business owner at all.
In order to avoid filing late, business owners need to understand when there corporate taxes are doing. Corporate taxes are due six months after the corporation’s fiscal year end. Business owners need to understand that interests are currently at three months, which is three months before your taxes are due. Outsource CFO says that business owners should not be afraid of this amount, because it is only one person to year, it’s the penalties for filing late that are extremely high. Business owners should ensure that they are writing the date of the fiscal year and and when their taxes are due on their calendar so that they never forget.
If the business owner has accidentally filed late, then as long as the revenue agency hasn’t started calling them to tell them that they are lips, or sending demand letters says outsource CFO, business owners will be able to approach CRA themselves, to inform them that they are late. Outsourced CFO says this is called voluntary disclosure, and most of the time, CRA will leave those penalties, as long as the business owner owns up to the fact they were late, and agrees to pay the interest. Since no business owner will ever be able to get out of paying interest, this is an extremely beneficial move for businesses. Entrepreneurs just need to remember, this only works if CRA hasn’t yet started demanding that they pay their taxes.
Business owners should also know, that if they haven’t filed in their business yet, but they have their business for over a year and ½, they technically are late their taxes says outsource CFO. However, there corporate year-end is sent by when they file their taxes many entrepreneurs believe that their year-end is triggered by when they incorporate, or when they get a GST member, but that’s simply not true. If a business owner understands that they are late in filing, before they even filed before, they can strategize with their accountant in order to minimize the penalties. They can strategize to make their first corporate year and in the last month in which they didn’t earn any money. The taxes will be due six months after that time, and so even if they owe penalties on that first year, if they didn’t profit, then they won’t owe taxes. Penalties that are 5% of everything says outsourced CFO. They may not file their second year late, but if they do, they are only paying penalties on one year, instead of two. This strategy can help businesses increase the cash flow in their business while avoiding penalties.
Business is very difficult says outsourced CFO. Business owners often fail because they simply run out of money for a variety of reasons. Businesses who are in danger of running out of money, may try a variety of strategies to help improve that. One way that businesses have tried increasing cash flow in their business is by filing their taxes late. The reason they would do this, is because they are short on cash, and are unable to pay the taxes that they owe when they file. Therefore they believe that filing late, will help them use the money taxes with, to help them generate more money so they can pay their taxes at a later time. This is a poor Strategy for a number of reasons.
The first reason why paying taxes late is a bad strategy to increase cash flow says outsourced CFO, is because just by filing late, business owners can be assessed with huge penalties Canada revenue agency. These for the first year is 5% of the balance owing in addition to 1% per month. If there are more than a single year late, the additional years are assessed with the penalty of 10% of the bank is going as well as 2% per month. This amount can fast, depending is owed and how many years have not filed.
The next reason why paying taxes late strategy to increase cash flow is because business owners are paying interest on the amount they owe anyway, all interest starts from the business starts owing the interest, not on the day they file. Interest starts accruing on taxes three months after the fiscal year it says outsource CFO, which is actually three months before their taxes are even. The over that amount or what, and the interest is only one person year. It’s such a small amount, that business owners should not fear these charges as a way of avoiding paying taxes. Pay on time. Late, literally does not affect the interest at all.
The next reason why paying taxes late as strategy to increase cash flow is a bad idea is because business owners we believe that they don’t have the money to pay their taxes, therefore if business owners aren’t able to pay their taxes at the time of filing, they can recruit a payment plan with Canada revenue agency says outsource CFO. They should do the get six months to pay their taxes, which can actually help increase the cash flow or than several other options could. This means they can file a time, penalties, working out how to pay the taxes off even, that can be beneficial to their cash flow. There is literally no reason why business owners benefits away from filing their taxes late says outsourced CFO. Once business owners are aware of this, they can immediately start improving the cash flow in their business and avoid making bad decisions. If you are in need of accounting assistance, then dont wait to call.