After Tax Day: A Guide for MCA Companies

David Roitblat is the founder and CEO of Better Accounting Solutions, an accounting firm based in New York City, and a leading authority in specialized accounting for merchant cash advance companies. To connect with David or schedule a call about working with Better Accounting Solutions, email david@betteraccountingsolutions.com.

Congratulations- you’ve survived Tax Day!

About 130 million tax returns were filed by Monday’s April 15 deadline, and business owners, employees and accountants will all breathe a sigh of relief and wait for the refunds to roll in.

Let’s explore what the next few months look like for those that successfully lodged their documents in time with the IRS, and those that didn’t.

I Am Amazing Because I Filed My Taxes On Time

Yes, you are incredible. Good job!

Having successfully sorted through your finances and organized it for the IRS, now is the best time to set yourself up to have an easier time filing in 2025.

Here’s a quick checklist of things you can fix now to make your life easier:

• Did you give yourself enough time to send W-2’s and 1099 documents to your employees and contractors?
• Did you make sure your employees and contractors have gave you a filled out W-4 or W9 on time?
• Were all your deals categorized and classified correctly by your bookkeeping company,or did your accountant have to constantly follow up with you to ensure he understood what deal was doing what?
• Was every deal conducted in different states accounted for tax purposes?
• Did you have all your documentation available and in order?
• Is your industry tailored CRM getting you all the information you need?
• Did your accountant prepare you for any taxes or surprise liabilities you may have incurred?

Knowing the answers to these questions can help you understand whether you had a great experience during this year’s tax season, or if you should begin to explore and implement new processes to shore up your team, books and reporting structure going forward.

I Have Not Filed Taxes Yet For Many Good Reasons

Yes, you are incredible too, and we can’t judge you for having very good reasons to miss the deadline. Here’s some information you need to know:

What happens if I miss the tax deadline but expect a refund?

If you’re sure you are due a refund from your 2023 tax return, you won’t face any penalties for an individual return late. You have up to three years to file and still get your refund, which might take four to six weeks to receive after you file. But for business and partnership filings, most states on your partnerships and business returns for filing late even if you don’t owe anything.

What are the consequences of missing the deadline when I owe taxes?

If you miss the deadline and owe money without filing an extension, you will face penalties for both late filing and late payment, plus interest on the owed amount until it’s fully paid. The state you are in will determine how severe the penalties will be.

What are the specific penalties for late tax filings?

The IRS imposes a failure-to-file penalty, typically 5% of the unpaid taxes each month, capped at 25%, and a minimum penalty if over 60 days late. There’s also a failure-to-pay penalty, about 0.5% of unpaid taxes per month, also capped at 25%.

Can I still file for an extension if the deadline is near?

Yes, you can file for an extension by the tax deadline, which gives you six more months to file your tax return. However, you need to estimate and pay any taxes owed by the original deadline to avoid penalties, and some states won’t even accept the extension unless the estimated taxes are paid.

What if I can’t pay the full amount I owe right away?

You can arrange a payment plan with the IRS if you can’t pay immediately. Short-term plans for up to 180 days are available at no cost, though interest and penalties still apply. For longer needs, long-term payment plans are available with varying fees.

Working with an experienced tax accountant specializing in your industry, in this case merchant cash advance accounting, can ensure you’re always on top of your finances and handle the specific challenges of your field effectively. This specialized knowledge helps in correctly filing tax returns, spotting potential tax reductions, maximizing returns and customizing strategies specially tailored for your business. If you’ve got any questions on your 2023 taxes or how to plan ahead for 2024, your friends at Better Accounting Solutions are always here to help.

David Roitblat is the founder and CEO of Better Accounting Solutions, an accounting firm based in New York City, and a leading authority in specialized accounting for merchant cash advance companies.

To connect with David, email david@betteraccountingsolutions.com.