Not all business taxes are created equally. Some can be filed late without much trouble other than a small fee. Others? Not filing on time or making a mistake can cripple a firm, put it on the hook for huge fees, or create an audit nightmare that takes months to sort out. Knowing which taxes are worth paying attention to versus others can save a firm from scrambling when they could have otherwise avoided the mistake.
It Matters to Operation
Certain taxes are tied to a business’ ability to operate. These types of taxes aren’t about owing the government some money. They’re tied to the ability to do business at all. When a tax has an association with a firm’s ability to operate, it’s inherently more important.
Businesses that operate vehicles over a certain weight are immediately looking at the heavy vehicle use tax. Not filing properly means not being able to get a vehicle registered or re-registered. That means they can’t use the vehicle. They can’t drive their product. Their income halts, and their operations stop all because of a tax filing.
The Penalties Are Stacked
Some taxes have serious penalties while others have relatively light penalties. Some only have penalties once or after a set amount of time. Others build on themselves as a percentage every day or month. Still others are create multiple types of penalties that stack on top of each other until what looks like a small tax bill suddenly balloons to an enormous headache.
A business owner dealing with heavy vehicle taxes can work with the best 2290 e-file provider to stay out of trouble when it comes to penalties for being even slightly late in filing this tax. The late penalties and accrued interest penalties hit right away and make what should be a simple task into a complicated endeavor.
The tax bills that stack the penalties are those that should be paid attention to first. A few days late on a tax bill that has minimal penalties might not matter all that much. A few days late on a tax that has robust daily or monthly penalties certainly deserves a business owner’s immediate attention.
Consequences Aren’t Limited to the Tax Filings
Some taxes lead to trouble beyond having to pay up. Missing payroll filings can lead to audits and increased scrutiny regarding how a business owner manages other tasks. Missing sales tax filings can cost a firm the ability to charge sales tax or even render them unable to be a vendor for other firms. Other tax situations can even affect credit ratings or the ability to obtain business insurance.
It’s these situations that warrant some taxes more attention than others, even if they seem low value. The penalties might not be as severe, but the business impact that other taxes have makes them more likely to cause trouble.
The Taxes Can Be Complicated
Quarterly taxes happen more often than once yearly taxes. By their very nature, they’re more deserving of attention than others. More often than not, missing a quarterly payment means creating drama in other areas when it comes to filing.
Annual taxes only happen once a year and can be forgiven more so than quarterly filings.
Taxes that take longer to file are obviously going to require attention well in advance of the due date. Taxes that take complex computations to figure out how much is owed are also going to need more attention than basic taxes.
Issue Specific Taxes Hurt More
Some industries are more associated with certain taxes than others. Restaurants have tip reporting requirements. Construction businesses are linked to prevailing wages. Businesses with vehicles are linked to weight-based taxes, fuel taxes, and others.
These industry-related taxes are different in that they seem worse automatically because they’re tied to the businesses’ operations.
Taking advantage of a loose tiered system might be the best approach for business owners looking to treat some taxes as more important than others.
Federal taxes have a serious impact whereas state and local taxes do have some impact, but it’s largely more limited in comparison. The IRS has significantly more impact on business and power than most state organizations. Federal tax issues have ripple effects as federal issues bring additional scrutiny on the business.
Certain state and local taxes can certainly be as impactful as federal issues though when they’re tied into state-issued business licenses and other items necessary to be in operation in particular states. A firm operating in multiple states has state tax issues in every place they operate.
Using a tiered method similar to the following can be the best way forward for many business owners looking to keep track of issues in tax areas that regularly treat general business taxes as burdensome, but only due at a particular time:
The best method is to separate taxes based on the impact they have on the business’ operations rather than the amount owed. The taxes that have an impact on the ability to operate should be separated first. After that, they should be sorted according to which ones incur fees in addition to what’s owed and which have steep penalties.
By using this tiered system, business owners can keep track of their tax obligations and ensure they don’t let anything slip by that would have an impact on their ability to operate.
