My dog ate my homework.
I was sick.
I thought you meant next week.
In school, we tried about anything we could to get an extension on a project or additional time to prepare for a test. As business owners, we try to get out of filing our taxes before the standard deadline by requesting an extension.
We may have better excuses nowadays, but needing an extension is just as silly and far more costly than trying to get a few more days to finish that book report.
The Cost of an Extension
If like me and you were able to plead and beg your way for an extension on a project, you soon realized the damage of this mistake. While you got an extension on one project, there was likely another project or test due at the exact time. Initially, it felt like you were getting more time, but you were actually just delaying the inevitable and losing time to complete the next big project.
The same is true for filing an extension. By pushing back your deadline, you lose that time to work on other parts of your business and put less time in-between this year’s taxes and next year’s.
Funny thing about the government. They want their money when it’s owed.
Even with an extension, if you do in fact owe taxes, they are required to be paid by your original deadline. If not, you will incur penalties and possibly have to pay an additional percentage fee based on your overall tax bill and the amount of time that has passed.
Any time you play with the IRS and tax deadlines, you’re playing a dangerous and risky game. With outstanding tax payments due, you are on their radar and may be looked at more closely than the average business in your industry.
Being late, whether on your taxes, homework, or stuck in traffic trying to make it to work before your boss realizes you aren’t there, is stressful! This puts a dark cloud over your head that can rain at any moment.
This stress adds pressure and can take your mind off of your family and aspects of your business that need your attention. It also can lead to diseases.
With any business decision, you have to weigh the benefits versus the costs. So what are the benefits to weigh the costs against when filing an extension on your business taxes?
Unless delaying the inevitable is something you consider a benefit, there is very little if anything to gain from filing a business tax extension. In the short-term, it can feel like you’re giving yourself a little bit of breathing room, but in reality, you’re just making excuses and pushing back the growth of your business while incurring costs and risks.
Don’t let the financial side of your business get away from you. It’s far too important to delay handling and taking advantage of.
Here at Kahuna Accounting, we work with small businesses across the country to handle their bookkeeping and help them look forward to grow their business instead of looking backwards wondering when something may come back to bite them.
Prevent future filings for extensions by putting a proper financial system in place that you can depend on. Whether hiring a virtual team like Kahuna Accounting to help or hiring a bookkeeper to manage your books, it’s an investment worth making, because you can only come up with so many excuses before it’s time to step up to the plate and take care of what you need to as an entrepreneur.