Outsourced CFO | Why Businesses Should Avoid Filing Taxes Late
Business owners should definitely avoid filing their taxes late says outsourced CFO. The penalties that they can accrue from filing leaves, are extremely damaging to the business. Many business owners think that they are increasing the cash flow in their business by filing late, however that’s not true. There are several better options that business owners can work with their accountant in order to increase cash flow in their business, but filing late isn’t one of them.
The first thing that business owners should realize, is that if they can’t afford to pay their taxes at the time of filing, they can always work on a payment plan with Canada revenue agency says outsource CFO. Not having cash flow at the time of filing, should not defile. If they contact CRA to let them know they need a payment plan, that can actually help increase their cash flow, by breaking down the amount that they owe over a six-month period, rather than having to try to pay everything and one lump-sum.
Business owners also need to understand, the interest on the amount due starts accruing at three months after their fiscal year end, not after they file. The interest is only one percent a year, so business owners should not read this amount says outsource CFO. But if they file relate the penalties that they receive will be. Filing even one day after their corporate due date, which is six months after their fiscal year end, entrepreneurs can be hit with a 5% penalty of the entire balance that going, as well as 1% per month. If they are more than a year late, they will owe 10%, and 10% per month. Even if they have never felt taxes before, is penalties says outsourced CFO.
Outsource CFO says there is a strategy that business owners can use if they realize the error in their ways of filing late, and they want to avoid the penalties, as long as can the revenue agency has not started sending them demand letters, business owners can approach CRA themselves, to inform them that they are they can often ask CRA if they will eliminate the penalties they may incur. More often than not says outsource CFO, CRA will remove the penalties if the business owner agrees to pay the interest. Since the business owners are going to be on the hook for the interest anyway, this is a great option. The only thing that a business owner needs to member, is this only works if CRA hasn’t already started them demand letters, or floating them to tell them that they are late.
By understanding the penalties, and how to file properly and on time, business owners can avoid filing late as an effort to increase their cash flow in their business if they are running into a cash crunch says outsourced CFO. This can help business owners plan to operate their business efficiently and without problems.
Business owners need to understand that increasing the cash flow in their business strategize says outsourced CFO. Without properly strategizing their cash flow, and leave business owners scrambling, and then attempting to increase cash flow in efficient ways such as delaying filing their taxes. Think filing their taxes late can help increase the cash flow in their business, is because they know they don’t have enough money to pay their taxes upon filing, so they delay filing so that they can come up with the money in order to pay their taxes later. Unfortunately, this doesn’t work, and ends up causing more problems for the business owner later on. Since 29% of all entrepreneurs who failed say that running out of cash was the reason they had to close their business, business owners should consider this very seriously.
Business owners believe that they have to pay their taxes at the time of filing, and is the reason they file late says outsourced CFO, they can approach CRA and work out a payment plan over six months that can help them spread out their tax payment to, so there’s no reason to file late. This six-month payment option actually may help business owners that are on their cash flow, and that payment plans loan can help business owners avoid the cash crunch in their business.
Often, business owners also believe that only starts accruing interest of the taxes that they owe after they file their taxes, but the reality is business owners start accruing interest on the taxes that they owe three months after their fiscal year end. Outsource CFO says corporate taxes are actually do six months after their fiscal year end, so they start accruing interest before their taxes are even do. Therefore, trying to save interest by filing late also doesn’t work. Business owners should also be aware that the interest charges are so minuscule, that that shouldn’t be a deterrent.
Business owners may not understand what the penalties are for late filing, says outsourced CFO so by understanding what the buildings are, can help business owners avoid filing. The first time that a business owner files past six months after their fiscal year end, they will owe 5% of the balance owing plus 1% every month. If a business owner is over one year late, for every year that there late, they will owe percent of the balance owing and 2% per month. These penalties add up extraordinarily fast. There’s also interest charged on the outstanding balances if the business owner files, which is 6% per year. All of these penalties add up to a huge amount that business owners can actually avoid altogether simply by ensuring that they file their taxes on time every single year. If they find themselves being able to pay, business owners can either work with their accountant, or Canada revenue agency in order to work through their issues, rather than try strategies that are doomed to fail from the beginning. We would like to become partners with you and solve all of the problems we can for you.