It is not uncommon for individuals to feel overwhelmed by the complexity of the tax process. This can also be true for individuals who own and operate businesses. Informed tax planning, however, can be critical for a business. Part of a solid tax plan is the timely filing of tax returns.
There are a number of consequences and penalties that may be assigned for failure to timely file a business tax return. It is important to file a tax return on time even if the filer is unable to fully pay the tax that is due at the time. It is possible to be assigned late fees and interest for failure to file a timely tax return.
For individuals who are self employed and run their own business, a failure to file a tax refund will result in self employment income not being reported for Social Security retirement and disability purposes. In addition, consequences for failing to file a tax return can interfere with attempts to secure financing for the business. Loan applications require the submission of tax returns that have been filed in order to secure a loan for a business.
In significant cases of repeated failure to file a tax return, additional penalties and criminal prosecution may also be possible. Whenever operating a business, it is important to have a thorough knowledge of tax consequences and be familiar with tax requirements necessary to keep the business compliant. In circumstances when a business is facing penalties and consequences associated with the failure to file a tax return, it is advisable to ensure that options to most effectively resolve the situation are well understood by decision makers to allow the business to focus on a successful future.
Source: Internal Revenue Service, “Filing Past Due Tax Returns,” Accessed Feb. 23, 2015