Paying your taxes and other obligations is important, especially as a business owner. To keep up on those responsibilities and mitigate the impact on your business, you need to be aware of what they are, how they work, and when they’re due. Here is an overview that can help you navigate all of this in a clear and concise manner.

How to deal with tax obligations

No matter how organized or efficient you are with paying your bills, there’s always going to be one or two things that get missed. If you don’t have a National Registered Agent (NRA), you can lose out on a huge amount of money in tax deductions and credits because your paperwork is getting lost or ignored by the IRS.

Every business needs an NRA. The NRA is an individual who can take over the paperwork for your business when it comes time to file taxes, renew your business license, and so on. This saves you money because you will not be late with a payment that is due and you will not incur penalties and interest.

You will incur penalties and interest

Generally, if you do not pay your taxes by the tax deadline, you will likely have to pay penalties and interest. The IRS charges a late payment penalty on any taxes you owe (up to 25%) and interest on the unpaid balance. If you fail to file your return by the due date, you may also be subject to a late filing penalty.

The IRS charges a late payment penalty of 0.5% of your tax bill each month that you fail to pay it. The maximum penalty is 25%. This charge is in addition to the interest which accrues daily at the rate set by the IRS each quarter (see below).

If you are unable to pay your taxes by the due date, you should file Form 4868 with the IRS to request an extension of time to file your return. This form does not extend the time for paying what you owe; it only gives you an extra six months time to file your return.

The IRS can put a lien on your property

When you have a lien, it may hurt your credit rating, making it harder for you to get loans for cars, homes, or other things. Also, you may find it difficult to rent an apartment or buy certain assets. In some cases, if the debt isn’t paid, the IRS could seize and sell any type of real or personal property that you own or have an interest in.

The IRS can seize assets

An IRS audit is one of the most common reasons for asset seizures. The IRS can seize assets because of alleged unpaid taxes, which is why it’s important to keep up on paying your taxes and other obligations.

The following are the types of assets that can be seized by the IRS:

Property — This includes real estate and vehicles, as well as items like jewelry, artwork, antiques, and collectibles. Cash, securities, and bank accounts are also property.

Stocks, bonds, and commodities — These are financial instruments such as stocks, bonds, and commodities. They’re considered property by the IRS unless they’re a part of a business (like mutual funds), in which case they’re considered personal property.

Bank accounts — If you don’t pay income tax on interest or dividends earned from a bank account, the IRS could take it in full or take it in part (through withholding).

Pensions — Pensions are typically assets you put money into when you retire, but they can be seized if you don’t pay income tax on them when you withdraw them.

Miscellaneous assets — Things like vacation homes, boats and art collections are taxable depending on their value. However, some miscellaneous assets, such as U.S.-based retirement plans, aren’t subject to federal seizure.

If no one files a claim with the IRS by the date set by the agency, the assets will be sold. As you can imagine, this can cause a lot of problems for business owners. But it doesn’t have to be that way. There are steps you can take to minimize the chances of losing your business to tax debtors.

The hit to your credit score will last for years

The government tracks your tax payments, so if you’re late on a payment, they’ll know. And they’ll be watching your credit score closely. This means that if you’re late paying your taxes, it’s not just your reputation that’s at risk. It could also drop your credit score for years.

By filing and paying your business taxes on time, two things can happen. First, your business will avoid being audited and the penalties that come with it. The second is that you set yourself up for better financing options and lower interest rates on loans to help grow your business.

It is better to be prepared to pay what you owe. You will keep up on your taxes and you will feel good about moving ahead and not looking back.