Missing a tax deadline can happen to any business owner, especially during busy seasons or when finances are tight. But when you’re running a business in Texas, missing tax deadlines, either for state or federal filings, can quickly lead to penalties and compliance issues.
If you’re filing business taxes late in Texas, it’s important to know what to expect and how to reduce the damage. Let’s take a look at what late filing means, how penalties work, and what steps you can take.
What Counts as Filing Late in Texas?
In Texas, the main state deadline for most businesses is the annual Texas Franchise Tax Report. This is due by May 15 each year, or the next business day if it falls on a weekend or holiday. If your report isn’t submitted by that date and you haven’t filed an extension, it’s considered late.
For federal taxes, deadlines depend on your business type. Partnerships and S corporations typically file by March 15, while C corporations and sole proprietors file by April 15. These dates shift slightly if they fall on weekends or holidays. Late filing happens when you miss these deadlines without an extension or fail to file at all.
Penalties You May Face
Filing late can cost you, both at the federal and state level.
With the IRS, the failure-to-file penalty is generally five percent of unpaid taxes for each month your return is late, up to a maximum of 25%. If you file but don’t pay, you may still owe a failure-to-pay penalty, which is 0.5% of your unpaid taxes per month. If both apply, they are capped together at five percent per month.
In Texas, late Franchise Tax filings come with their own set of penalties. If you’re one to thirty days late, the state adds a five percent penalty on the amount due. After thirty days, the penalty increases to ten percent, and interest starts to build. Even if you owe nothing because your business falls below the revenue threshold, not filing the report can still trigger late fees and possibly affect your business’s standing with the state.
Common Consequences for Small Businesses
When taxes are filed late, small businesses may face more than just fees. Penalties and interest can put a strain on cash flow, especially for newer or smaller companies. More importantly, falling out of compliance with the state can cause bigger problems.
Your business could lose its “active” status with the Texas Secretary of State, which can block you from renewing licenses, securing contracts, or applying for loans. It may also lead to extra attention from tax authorities during future filings.
What You Can Do If You Missed a Deadline
If you’ve missed a deadline, don’t ignore it. Filing late is better than not filing at all. Submitting your return—even if past due—can help limit penalties. If you’re unable to pay the full amount, the IRS may allow a payment plan so you can pay over time.
In Texas, even if you’re late on your Franchise Tax Report, it’s best to file right away to stop the penalties from increasing further. This also helps keep your business in good standing with the state.
Good recordkeeping is useful in these situations. If you request penalty relief, showing that you made an effort to fix the issue quickly may improve your chances of getting approved.
Preventing Late Filings in the Future
Once you’re caught up, staying current is much easier than dealing with the fallout of another missed deadline. Simple steps throughout the year can help you stay ahead of both federal and Texas due dates.
Here are a few habits that can help:
- Set calendar reminders well before each tax deadline
- Work with someone who can track both IRS and Texas due dates
- Set aside tax funds each month to avoid last-minute pressure
These small steps can go a long way in keeping your business organized and reducing the risk of missed filings.
Work With Deligans Tax Partners, LLC
If you’re dealing with the impact of filing business taxes late in Texas, we can help you get back on track. At Deligans Tax Partners, LLC, we help Texas business owners get back on track with their tax filings. Whether you need help with missed deadlines or keeping your records in order, we offer reliable support through individual tax preparation, business tax preparation, business and tax consulting, and bookkeeping services.
Visit https://deligans.tax to find out how we can support your business moving forward.