- The Washington Times - Tuesday, August 16, 2005

Small business owners across the country were scrambling early this month, trying to meet the Monday deadline for filing their 2004 returns. They are the taxpayers who didn’t make the April 15 deadline and filed for an extension, but again failed to get their returns together.

Many of these owners should probably look at how they are running their businesses and find a way to get their taxes done in a calm, timely manner.

There are company owners who purposely, even strategically, wait for the last minute. Some owners who still need to make contributions to their Simplified Employee Pension retirement plan for the previous year file for extensions as a matter of course as part of their cash-flow planning.

But those who habitually spend late July or early August sorting receipts and invoices and filling out Schedule C probably should find a better way to get their taxes done.

“There is something wrong, whether it’s your filing system, document retention policy or simple procrastination,” said Paul Gada, a senior tax analyst with CCH Business Owners Toolkit, a service based in Riverwoods, Ill.

Whether it’s your filing system or poor record-keeping, it raises the question of whether you have a good handle on your business. In that case, your tax troubles are a symptom of a much bigger problem in your company, because you probably don’t have an accurate picture of your cash flow and whether you are turning a profit or operating at a loss.

If the problem is that you get sidetracked or tend to dawdle, you also should think about how you are running your operation.

In either situation, the best solution is likely to be getting some help. Hire a bookkeeper, even someone who works part-time, or contract with a bookkeeping service to help you be better prepared long before April 15.

And since it’s clear you are having trouble getting your return filled out, that’s a task best delegated to a professional such as accountant or tax attorney.

A change in attitude is also in order if you think there’s nothing bad about leaving your taxes until the last minute — there’s a good chance it’s costing your company money. If you owe taxes, you will find yourself paying an additional half a percent each month in late payment penalties to the IRS, and your state government may penalize you as well.

Most professionals look at taxes as something to be considered year-round — not just when it’s time to file a return. They see tax planning as inseparable from a company’s strategic and financial planning.

Taking all this into account, there are going to be times when a business owner just can’t get it together. And if Aug. 15 is nearing and your return still isn’t in shape to be filed, the IRS is willing to give you two more months if you have what the government considers special circumstances or hardships. But beware: As the IRS says on its Web site, www.irs.gov, “this extension request is not automatic” — the agency must approve an extension, unlike the automatic extension available for the April 15 filing deadline.

To request the additional extension, you need IRS Form 2688, Application for Additional Extension of Time to File. This year, the extension will run through Oct. 17, two days later than the usual deadline because Oct. 15 falls on a Saturday.


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