Not Filing Your Tax Return Can Bite You at the Weirdest Times


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4-15-11

The IRS gave us a couple of extra days to file this year. You have until 4-18-11 to file your personal or partnership return or extension. An extension will move the due date on your partnership return to 9-15 and your personal return to 10-15.

And every year there are some who just feel overwhelmed with taxes and reporting. Maybe you’re in that spot. It could be because you missed a few years already and are afraid that if you file an extension or return now, the IRS is going to start looking for the older returns. Or it could be that you don’t have your records together to know if you owe extra taxes. Or it could be you just don’t want to deal with it.

The IRS is coming down hard on non-filers. Even if you don’t have the money now to pay your taxes, still file your tax return or extensions.

Each Saturday we feature a “Stupid Business Story” at SmartBusinessStupidBusinessOnline. The idea is that we can all learn from the mistakes that other entrepreneurs have made.

Do you have a lesson you’d love for other entrepreneurs to learn as well? Please submit your stories to Stupid Biz Stories .

Problem:

I have a new restaurant client that hadn’t filed tax returns for the last SIX years! They figured that they had a loss, so they didn’t owe taxes anyway.

However, looking at their books…I had to remind them that cash flow and income/loss are not the same thing. They had some large loan payments going out which meant cash flow was tight during these years.

Even though they were paying their payroll taxes on a timely basis, the rest of their books were a total disaster. Probably would’ve been cheaper to hire an accountant at the start of their business.

I got involved when they wanted to buy the building they are in. Guess what the bank needed for approving a loan? Past tax returns and financial statements! Now they have to pay me for recreating 6 years worth of financial statements and tax returns. The total cost to them is at least 40% more for the CPA work than it would’ve been if they had hired me to do their financials and tax returns starting six years ago.

LESSONS:

If you don’t know how to do it right, hire someone who does! Do it timely and do it right to save so much time, hassles, and money.

Thanks to:

Ed Karpus, CPA
Koonce, Wooten, and Haywood LLP
Please come visit us every Saturday at
SmartBusinessStupidBusinessOnline for Stupid Business Stories.



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