Outsourced CFO | When To File Taxes
Many business owners are completely unaware of the penalties that are involved in filing their corporate taxes late says outsourced CFO. There may be a variety of reasons why a business owner doesn’t to pay their taxes on time, from not being able to afford paying their taxes, to not having accountant yet, or being uninformed. However, business owners should understand very clearly, that there are so many penalties that are associated with filing their taxes late, that it is definitely not worthwhile to miss there filing date. The penalties can end up being such a detriment to the business, that they potentially could end up with a cash crunch in their business that they can’t recover from. Since 29% of business owners who failed to say that the reason they failed was because they ran out of money, business owners need to be extremely aware of this to avoid it happening to them.
Business owners who miss there filing deadline will have to pay 5% of the entire balance of taxes owing as well as 1% per month as a penalty. Interest will also be accrued on top of that penalty in the amount of 6% per year. This is huge amount to have to pay, especially depending on how much tax is owed. Business owners can write their filing date to their calendar, so that they can keep track of when you have to file every single year. There filing deadline will be six months after there fiscal year end. The letter when fiscal year and is, business owners have six months after that in order to file. That should give them enough time to get their documents together, and allow their accountant to complete that your end for them. Business owners should be aware, that even though their taxes are not due until six months after their year end, they start accruing interest on the amount that they owe at three months after there fiscal year end. Business owners should want to let them be startled by that, because the interest is very small, only 1% per year. It’s the penalties that are high and should be avoided.
If business owners have missed their filing deadline for any reason, either they didn’t know when it was supposed to be, or they were having some sort of financial problems, business owners should understand, that if CRA has not started sending them demand letters, or calling them, even though they are late, it is not too late to do what is called a voluntary disclosure says outsourced CFO. That is when a business owner approaches CRA themselves, and admits that there late. They can ask CRA to remove the penalties from the their accountant, as long as they agree to pay the interest charges. Since the interest charges are going to be do whether they filed late to or not, there’s no way they can get those interest charges removed, so agreeing to pay the interest in exchange for getting penalties removed is an extremely good move.
A favorite quote of Outsourced CFO is from Jim Collins, the author of six books has been quoted as saying, “you must maintain unwavering faith that you can and will prevail in the end, regardless of the difficulties, and at the same time, have the discipline to confront the most brutal facts of your current reality, whatever they may be.” Business owners should keep this quote in mind when they are facing tax filing deadlines. Many business owners who are running into cash shortages often believe that they will be able to minimize their cash flow problem, by filing their taxes late. They believe that by filing late, they can delay the amount of taxes that they owe, and between when they owe them and when they eventually pay them, they can generate more revenue in their business to avoid a cash crunch. However this doesn’t work. Not only did the patentees they occur by being late make it not financially viable, business owners should always have the discipline to confront the most brutal facts of their reality and prevail in the end.
If business owners are truly having a hard time with cash flow, they should avoid paying their taxes late. If they pay their taxes on time, they will be able to ask CRA for a payment plan that will allow them to pay their taxes over a period of six months says outsourced CFO. This can often be all that’s needed for a business owner to avoid cash flow problems in their business.
Not only can business owners ask the Canada revenue agency for a payment plan, the drawbacks of the filing late, are so huge, that they can drastically affect their cash flow problems in a negative way simply by the late charges they face. Simply by filing late, business owners can owe CRA 5% of the taxes that they have to pay and 1% every single one of the. If there more than a year behind, for each year that they are both, they owe percent of the balance owing as well as 2% per month each year is added on top of each other, there’s additional interest charges on top of the penalties on the outstanding balances at 6% per year. Outsourced CFO says that this doesn’t make any sense for business owners to pay late. The penalties are far too high.
Business owners may believe that start accruing interest at the time of filing but outsourced CFO says that they actually start accruing interest starting three months after there fiscal year end. This is actually three months before the corporate taxes are even do, and are only 1% per year. The interest charges are so negligible, that business owners should not be in fear of them. Especially since they are charged that regardless of if they pay late or on time, so they should always aim to pay on time. please give us a call we are waiting to serve you and your business today!