One of the biggest heart-stopping moments in the business world is the realisation that you have actually missed a tax deadline. You start to panic, your palms get sweaty and all manner of disaster scenarios start to run through your head.
First things first, do not panic!
Whilst it’s likely that you are going to have to pay interest and a possible penalty, provided you action the issue straightaway and file your return, paying any tax that is due, you will have diverted a major disaster with ease.
Firstly, let’s give a rundown on what will happen:
• Daily interest will be charged on unpaid amounts for the previous tax year. The interest rate can change every three months
• Late filing penalties will be applied, which is 5% of your balance plus an extra 1% of the balance owing for each month your return is late, up to a maximum of 12 months
For this reason, the moment you realise that you have missed the deadline, get your taxes filed and pay the balance. This will cut down on the cost of the incident and draw a line under it. No panic, no further stress.
What you do need to be careful of however is repeatedly missing deadlines. In this case, there may be problems afoot. Repeatedly missing tax deadlines will result in penalty called a federal, and provincial or territorial repeated failure to report income penalty. This can be costly.
The single best way to avoid any problem such as this is to not miss deadlines in the first place! Ensuring that you know when deadlines are is vital, but you should also have some system in place which means that around one month beforehand, you start to collect the information you need. By filing at the right time, you can prevent a major headache and save cash for your business.
Where Cloud Accounting Comes In
Cloud accounting is a good way to streamline your entire accounting processes, and therefore ensure that you never miss a deadline. When everything is synced, it’s borderline impossible to find anything too hard to face! Cloud accounting means that reports can be pulled from your up to date accounts with ease, and this information will form the basis of your tax return, ensuring that you file at the right time, avoiding penalties in the process.
The other major plus point of opting for Cloud accounting is that it is the most up to date and accurate reflection of your company’s performance levels. At any time you can choose to look at how your business is doing, and make decisions accordingly. You don’t need to worry about inputting endless data, because your software will input it automatically, when everything is synced together, e.g. automatic invoicing and receipt scanning.
There’s no doubt that filing taxes can be a headache, but most of the time that issue is down to ineffective and hard to use accounting processes. When you streamline everything and make it easier, nothing is a headache.
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- Written by: Jag Bath