Download the Guide: 2022 Tax Deadlines
2022 is here and with that comes tax season, use this document to stay up to date on important 2022 tax deadlines.
Running a small business has many challenges—the cost of benefits, finding and keeping skilled employees, government regulations, and financing just to name a few. But one of the least enjoyable and risky aspects of running your own small business is taxes.
Let’s be honest, we don’t like to deal with our personal taxes, much less the complexity that comes with taxes when you run a small business. If done incorrectly, taxes can cost you a lot of time and money.
According to the IRS, the following are the most common and costly tax mistakes that business owners make. We’ve provided an overview of how they occur, their penalties, and most importantly—how you can avoid them.
Underpaying taxes as a business happens when you don’t pay enough of your estimated taxes (i.e. unknowingly withhold less tax than is required) or pay late. You’ll know if you’ve underpaid or are late when the IRS sends you a notice or letter in the email. By this point, however, you might already have a penalty.
The penalty for this tax mistake depends on the amount of underpayment, how late it was, and the interest rate on underpayments that quarter. So depending on the size of your business—the penalty could be steep. To avoid this tax mistake:
Employment taxes, social security, and Medicare taxes must be withheld and deposited monthly or semi-weekly—depending on your preference. But if you do not deposit them correctly or on time, you may be charged a penalty.
The penalty received depends on the number of days your deposit is late, but it ranges from 2-15% of your unpaid deposit, plus interest. To avoid this tax mistake:
The easiest way to avoid tax mistakes is to ensure you don’t file late! That way if an issue or error occurs, you have the time needed to fix it. Take note that the filing requirements and deadlines can vary depending on your type of business.
The penalty for filing late is 5% for the taxes you owe per month for the first five months, up to 25% of your tax bill—plus interest. The IRS advises that you file all tax returns that are due, regardless of if you can pay in full. At the end of the day, it’s illegal not to file. And depending on your business type, you can be held personally liable for any unpaid taxes.
So the advice on this tax mistake is short and simple—don’t file late. Take note of all tax form deadlines at the start of each year to avoid penalties and add them to your calendar.
Small businesses that are just starting out are especially prone to using one credit card for everything. If you or multiple people in your organization aren’t keeping track of business expenses properly, it could cause errors in deductions. Additionally, if you are ever audited it makes things very difficult and puts your business at risk of more penalties.
To avoid this issue:
Obsidian HR knows the burden that tax administration places on businesses. As a result, we process, file, pay, and distribute many of your payroll tax documents, reports, and deposits on your behalf.
We stay up to date with the changes, filing requirements, and deadlines that each tax season brings so you don’t have to. We’ll also remind you of other important dates and HR requirements.
To learn more and stay up to date with this year’s tax deadlines, download the guide below!