What happens if a business is late filing taxes?
Filing your taxes late can lead to a few headaches and sadly they’re not the kind you can fix with coffee. The IRS will impose penalties if you miss a filing deadline and those can add up quickly. So let’s break it down:
Late Filing Penalty
If your small business misses the deadline, the IRS charges 5% of the unpaid taxes for each month (or part of a month) your return is late, up to a maximum of 25%. This penalty applies to business entities like sole proprietors (filing Schedule C with their personal taxes), corporations (filing Form 1120), and partnerships (filing Form 1065). That’s why it’s important to make every effort to file on time to avoid the penalty – even if you can’t pay your tax bill right away.
Late Payment Penalty
For small businesses that owe taxes and don’t pay by the due date, there’s an additional penalty of 0.5% of the unpaid taxes each month (or part of a month) the balance remains unpaid, up to 25%. This is on top of the daily interest accruing on the unpaid balance. It’s recommended that you pay as much as you can by the deadline to keep costs down.
Interest on Unpaid Taxes
On top of penalties, the IRS charges interest on any unpaid tax balance. And here’s the ugly truth: since interest accrues daily, the longer you wait, the more it’s going to cost you.
What if my business can’t pay right now?
There’s no need to panic if cash flow is tight! The IRS offers payment plans to help you manage your business’s tax bill over time. It’s important to remember though, that the sooner you file the fewer penalties you’ll face.
Don’t Miss These Critical Tax Deadlines for Your Small Business
Tax season sneaks up out of nowhere on small business owners when you’re juggling daily operations, making it easy to lose track of critical filing dates. To help you confidently navigate the year, we’ve compiled a list of essential tax deadlines for 2025, so you can mark your calendars and get ahead of the game!
1. January 31, 2025: Forms 1099-MISC and 1099-NEC Due
You’ll need to send out Form 1099-MISC or 1099-NEC to any contractors or freelancers you paid more than $600 in 2024.
2. March 17, 2025: S Corporations & Partnerships Tax Returns Due
Structured your business as an S corporation or a partnership? Your tax return is due.
3. March 17, 2025: Extension Application Deadline for Partnerships & S Corporations
The extension application for partnerships and S corporations is due for those businesses needing more time to file.
4. April 15, 2025: Individual Tax Returns, LLC Filings, First Quarter Estimated Tax Payments Due, & Extension Application Deadline
For most small business owners, like sole proprietors or single-member LLCs, your personal income tax return is due. This includes filing Schedule C, which reports your business income and expenses.
If you’re self-employed or have income outside of regular withholding, this is also the deadline for your first quarterly estimated tax payment for 2025.
Helpful Tip: Calculate this payment early to avoid surprises and stay ahead of any potential penalties.
Individuals who need more time to file, as well as sole proprietors and C corporations, can apply for an extension by April 15th.
5. June 16, 2025: Second Quarter Estimated Tax Payments Due
Don’t forget, your second payment is due for those businesses that pay quarterly taxes.
6. September 15, 2025: Third Quarter Estimated Tax Payments Due
The third quarterly payment is due. Like the first two payments, it covers your estimated taxes for income earned during the third quarter.
7. October 15, 2025: Extended Tax Return Filing Deadline
If you filed for an extension, your final deadline to submit your 2024 tax return is today. This applies to individuals and small businesses filing Form 1040 with a Schedule C or partnerships filing Form 1065.
Important note: The extension applies to filing your tax return, not your payment. Any unpaid tax balances will accrue interest and penalties after the April 15th deadline.
8. December 31, 2025: End-of-Year Tax Planning
This technically isn’t a deadline but December 31st is your last chance to do some tax planning for the year. It’s a good time to review your business income, maximize deductions, and contribute to retirement accounts. The earlier you get this done, the better off you’ll be when tax season rolls around.
The Significance of Tax Deadlines for Your Business
Missing a tax deadline may seem like a minor inconvenience, but it can quickly disrupt your plans. Staying ahead of your filing responsibilities saves you a lot of stress and keeps your business running smoothly.
Need Help With Your Taxes?
Every business’s tax situation is unique. If you’re uncertain about yours or need help with filing, we’re here to help! Reach out to us for any guidance as you navigate the upcoming tax season.
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