Introduction: We’ve all heard the saying, "Failing to plan is planning to fail." This rings especially true for home builders when it comes to managing tax deadlines. In this blog post, we’ll explore the story of Bob, the bad builder, and Sammy, the star builder, as they navigate tax deadlines. You’ll learn how Sammy’s proactive approach to bookkeeping and tax planning keeps her stress-free and successful, while Bob’s procrastination leads to penalties, missed opportunities, and unnecessary stress. Let’s dive in!
The January 31st Deadline: When January rolls around, it's time for builders to close out the previous year's books and get everything in order for tax reporting. Sammy knows this and uses QuickBooks to track all her payments. By the end of January, her 1099s are prepared, accurate, and sent to her subcontractors on time. Her subcontractors appreciate the professionalism, and everything runs smoothly.
On the other hand, Bob struggles to keep track of his subcontractor payments. With no system in place, he’s scrambling to pull together the information just days before the January 31st deadline. His subcontractors are frustrated and waiting for their 1099s, which may be inaccurate due to Bob’s rushed approach.
February 15th - A Tale of Two Builders: By mid-February, Bob is buried in a mountain of receipts and paperwork, still reconciling the previous year’s transactions. His tax accountant can’t even begin preparing his tax return until Bob catches up on months of bookkeeping. This lost time could have been spent building homes, but instead, Bob is playing catch-up.
Meanwhile, Sammy has been reconciling her books monthly, and by February 15th, she has clean financials ready to send to her tax accountant. Her accountant is able to start preparing her business tax return right away, and Sammy stays focused on what she does best: building homes.
March 15th - Corporate Filing Deadline: For builders with partnerships, S-corporations, or other specific entities, the tax return filing deadline is March 15th, not April 15th. Sammy is ahead of the game. She receives her tax return early, reviews it, and makes any necessary changes well in advance. Her business partners are also able to file their personal returns without delay.
Bob, however, is emailing his tax accountant at the last minute to request an extension. He’s still cleaning up his books and can’t even send the required K-1 forms to his business partners. The stress mounts as the clock ticks closer to the April 15th deadline.
April 15th - The Final Countdown: Sammy files her personal tax return on time and ensures her first-quarter estimated tax payment is sent. She planned ahead and everything is running smoothly, giving her peace of mind.
Bob, on the other hand, is still cleaning up his books and scrambling to get his tax return filed. He hasn't made his quarterly estimated tax payments and is already behind on the current year’s tax planning. Bob is facing unnecessary stress while Sammy enjoys a stress-free April.
The Long Wait and Missed Opportunities: By June 15th, Sammy’s quarterly estimated tax payment is automatically withdrawn from her account. Bob, however, still hasn’t filed his corporate return and is struggling with last-minute paperwork.
When September rolls around, Bob misses out on a relaxing Labor Day weekend because he has to cancel his plans to catch up on his bookkeeping. His corporate tax return is due September 15th, and he’s still trying to fix errors in his financial records. The delay causes him to incur penalties and interest on overdue payments. The hidden costs of procrastination are eating away at his profits.
Meanwhile, Sammy is enjoying a well-deserved vacation in Europe. Her tax payments are on track, and she has no surprises waiting for her when she returns. She planned ahead and managed her taxes responsibly, ensuring that she can enjoy her time away from work.
Conclusion: Bob’s procrastination has led to missed opportunities, unnecessary stress, and hefty penalties. Sammy’s proactive approach to accounting and tax deadlines, however, keeps her business running smoothly and stress-free. By staying organized, planning ahead, and prioritizing timely payments, Sammy avoids the pitfalls of tax procrastination.
For builders, it’s clear: be like Sammy. Focus on running your business, not running from tax deadlines. Plan ahead, stay organized, and give yourself the peace of mind you deserve.
For more insights on how to stay on top of your bookkeeping and tax deadlines, watch our latest video with Jon Markee, your Builder CPA.