How to File Back Taxes Without Records for Your Small Business
As a small business owner, you have obligations that include filing taxes for your company. But doing so can be challenging, especially if you’re unprepared. You risk becoming further and further behind on your taxes if one event leads to another. It’s still possible to file a return for back taxes even if the deadline for your tax return has passed. Figuring out how to file back taxes without records will be the bigger difficulty.
If you do not have a thorough accounting of your finances, it will be challenging to prepare your tax return. If you are unsure of how much money you have earned, how can you make payments? Thankfully, you have choices. Continue reading to learn why it’s important to file back taxes and how to get started.
Justification for Filing Back Taxes for Your Small Business
Even though the deadline has long since passed, there are still plenty of reasons to file your income tax returns. Avoiding what happens if you don’t file your taxes is worth it, even if it’s late.
The IRS will eventually file a substitute return based on their data to determine what you owe if you don’t file a return. They most likely won’t list all of the benefits and deductions for which you qualify. If you don’t file a return, you will also forfeit any potential tax returns.
Additionally, there is a failure to submit a penalty fine. If you have unpaid taxes, they will increase over the next five months for each month that you don’t file a late return.
To claim those deductions and get your refund, it’s worth learning how to submit your back taxes. No matter how late you file, filing your small business taxes helps you ensure that you have paid everything you owe. Over time, unpaid taxes will accrue hefty penalties, and if you don’t pay, the IRS will eventually take action to collect the debt on its own.
How Far in the Past May You File Unpaid Taxes?
All past-due tax returns will be accepted by the IRS. However, you must file your return within three years of the first due date if you intend to collect a tax refund or credit. If you file past-due tax returns for periods earlier than that, the value of doing so decreases.
To claim any benefits you left behind, you should pay back taxes for at least the last three years, ideally the last six. The amount of data you still have from those years may also affect how many years you are allowed to file back taxes.
How to File Forgiven Taxes
You might be wondering if you can file back taxes. Yes, but you might not want to go it alone, especially if you lack important records to use as a guide. Like any other 1040 tax return, you can file back taxes.
Your overdue federal tax returns will be accepted by the IRS as soon as you turn them in. You should research your state’s laws on state taxes or consult an accountant if you have any questions.
It will be harder to calculate your tax liability if you don’t have a good record of your finances over the relevant period.
Assemble Financial Records
The first step in filing your return is gathering all the financial information you can about the relevant tax years. Even if your bookkeeping is inconsistent or unreliable, you must still have some records or hints that can be used to determine your tax liability.
Some of the most popular resources you might be able to use to compile your past-due tax return include the following:
- Statements of credit card and bank accounts.
- W-2s and Social Security statements are tax documents.
- Business expenditure receipts
- Dated emails or printed transaction records
Asking for Tax Transcripts
You might not find sufficient data in your records to proceed by yourself. Fortunately, the IRS keeps a variety of documents and forms for a minimum of three years. You can receive your tax record by requesting IRS tax transcripts using form 4506-T.
Several different types of tax transcripts are available for your request, including:
- Transcripts of the tax returns you filed in the past
- A summary of your fundamental filing status and taxable income as recorded by the IRS
- W-2s, 1099s, and any other pertinent documents that the IRS has obtained from other companies or financial institutions are collected in a wage and income transcript.
Consult With Forensic Accounting Professionals
If you’re having trouble and still don’t understand how to submit back taxes without W-2s or other supporting documentation, you might need to hire a tax expert or a team with expertise in forensic accounting. Investigating and reconstructing corporate activities without regular records is a specialty of forensic accounting.
To protect yourself from a potential audit, you want to deal with professionals who can put the data together, optimize your savings, and complete your tax returns accurately.
How to Get Help With Your Delinquent Business Taxes
You could require professional assistance with tax preparation if you’re trying to figure out how to file back taxes without records. Find a trustworthy accountant that can assist your business with filing past taxes and get your bookkeeping for the future.
We at Your Part Time Accountant are ready to offer your firm expert small business tax advisory services. Don’t wait to ask for help if you need it to catch up if you’re behind.