Whether you run a large company or a small firm, it is crucial to understand your tax obligations. Business owners have to pay various types of taxes and you need to familiarize yourself with your tax obligations based on your unique circumstances.
It is crucial to avoid falling behind on taxes, whether you need to set aside money and look ahead, apply for an extension or make financial sacrifices in order to stay current.
Looking at various kinds of taxes businesses have to pay
According to the Internal Revenue Service, business owners have to pay taxes for a number of reasons. With the exclusion of partnerships, every business needs to file income tax returns each year. Moreover, if you are self-employed, you have to pay self-employment taxes. If you have staff members, you will need to pay employment taxes and most businesses have to pay estimated taxes throughout the year. Depending on the nature of your business, you could have to pay excise taxes as well.
The consequences of missing tax payments as a business owner
If you miss tax payments or fail to pay taxes for an extended period of time, you could face harsh repercussions as a business owner. The IRS imposes stiff penalties on many businesses that miss tax payments and you could also have to pay interest on back taxes. Sometimes, the financial impact of back taxes creates serious hardships for businesses, even threatening the future of these firms altogether.
If you are already facing legal challenges over unpaid taxes, you need to review your options and identify the best path forward.