It’s that time of year again, tax season. I normally enjoy this type of season because I generally will get money back and my taxes are pretty easy to file. But then again, I’m not a business owner. Being a small business owner you have many things on your mind and sometimes that can cause you to forget things time after time. But one thing you shouldn’t forget is to file your taxes because the consequences could be pricey.
Cameron Keng of Entrepreneur.comEntrepreneur.com shared that if you are a member or an owner of a LLC (Limited Liability Company) that you are required to file a 1065 Partnership Tax Return, even if you didn’t make any money. Now you only have to file this if you have more than 1 member or owner in the LLC since the IRS views that as a partnership. And here is where it gets pricey. For every member or partner for your LLC and every month late for filing, the IRS charges you $195. That is $195 per partner and then $195 per month. If you are one day late, that is considered a month. Let’s give you the impact in dollars and cents: You have 3 partners and you are 6 months late filing. That is $195 x 3 = $585 plus $195 x 6 = $1170. Your total owed would be $1755. I don’t know about you but that’s a big chunk of change for being a few months late.
The moral of the story is that no matter what you should pay your taxes on time. The IRS does offer a forgiveness for this called “first-time abatement”. This forgiveness is given out by the IRS’ discretion however per Cameron Keng, most do receive it. Definitely something to keep in mind in case you need it one day.
Now that you know about this form you need to file, make sure to fill it out this year when completing your taxes.
Check out Cameron’s full post “The Steep Cost of Filing Your Taxes Late”.