Feeling stressed about the April 15th tax deadline? You don’t need to be! Here’s the good news, filing a tax extension isn’t just okay; it’s often the smartest financial move to make if you’re in a position of rushing to file your taxes by the deadline.
In this episode, Danielle Hayden, CPA and founder of Kickstart Accounting, Inc. and KSA Tax Partners, breaks down everything you need to know about tax extensions, both the common misconceptions and benefits surrounding them as well as how they factor into tax prep.
Key Takeaways:
- Understanding Extensions: A tax extension provides an additional six months to file, but estimated taxes must still be paid by April.
- Tax Extension Myths: The IRS does not penalize or audit you for filing an extension; they just want their money on time.
- Accuracy Over Speed: Filing too quickly can lead to costly mistakes—accuracy should come before speed.
- CPA Support: Most CPAs, including KSA Tax Partners, handle tax extensions automatically for their clients.
- Planned Tax Prep: Scheduled tax weeks at KSA Tax Partners ensure transparency and eliminate uncertainty.
Topics Discussed:
What Is a Tax Extension (00:00:31 – 00:01:27)
Tax Extension Common Misconceptions and Benefits (00:01:27 – 00:04:47)
Tax Prep and KSA Tax Partners’ Approach (00:05:01 – 00:08:18)
Resources:
KSA Tax Partners | https://ksataxpartners.com/
Book a Call with Kickstart Accounting, Inc.:
https://kickstartaccountinginc.com/book
Connect with Kickstart Accounting, Inc.:
Instagram | https://www.instagram.com/Kickstartaccounting
YouTube | https://www.youtube.com/@businessbythebooks
Facebook | https://www.facebook.com/kickstartaccountinginc
Episode Transcript
00;00;00;00 - 00;00;31;08
Danielle Hayden
Welcome back to Business by the Books, the podcast where we empower entrepreneurs to take control of their financials, grow their business and make informed financial decisions with confidence. I'm your host, Danielle Hayden, CPA and founder of Kickstart Accounting, Inc. and KSA Tax Partners. Today, we are tackling a topic that many business owners misunderstand: Why filing a tax extension isn't just okay, but often the best financial move for you and your business.
00;00;31;14 - 00;00;57;03
Danielle Hayden
So if you've ever felt rushed to meet the April deadline, scrambling for paperwork, or unsure if your numbers are accurate, this episode is for you. Because the truth is, filing an extension isn't about procrastination. It's really about slowing things down, making sure that things are accurate, and protecting your business from costly mistakes. So today we'll go over what is an extension and why they're often necessary,
00;00;57;05 - 00;01;27;19
Danielle Hayden
how the accounting industry actually works, and the financial benefits of taking your time to file correctly. Now, your bookkeeper might be waiting on you to finalize your financials. So let's start off with what is a tax extension. A tax extension is simply an official request to the IRS for more time to file your tax return. It gives you an extra six months, moving your deadline from April to October.
00;01;27;21 - 00;01;51;06
Danielle Hayden
Here's the key thing to remember though, you guys, it is an extension to file, not an extension to pay if you owe taxes. You still need to make a payment by April to avoid penalties and interest. So there are many reasons why you might want to file a tax extension. Well, you might want to ensure that all your financials are accurate.
00;01;51;08 - 00;02;17;12
Danielle Hayden
Take that time to review your financial statements. Get the statements that your bookkeeper needs to ensure that your balance sheet is accurate. You might need to wait for important tax documents like your K-1s, 1099s, interest statements. And you might want to just slow things down so that you can ensure the accuracy of your return. Remember, your tax return is ultimately your responsibility.
00;02;17;14 - 00;02;48;10
Danielle Hayden
Now, does a tax extension increase your audit risk? Absolutely not. This is one of the biggest myths around tax extensions. It does not increase your risk of an audit. In fact, I would argue that rushed inaccurate returns are far more likely to trigger an audit than an extension than taking your time to file correctly. Here at Kickstart Accounting and KSA Tax Partners, we believe that it's better to file correctly
00;02;48;12 - 00;03;15;20
Danielle Hayden
Then quickly, I want to be clear. I do not want you just to wait and file late. You need to file an extension. If you miss that April deadline and don't file an extension, the penalties start to stack up fast. You'll have failure to file penalties, failure to pay penalties, plus interest. So you need to file your extension and pay 90% of what you owe
00;03;15;22 - 00;03;40;15
Danielle Hayden
to really minimize those penalties and interest. Now I will say that most CPAs, including KSA Tax Partners, we will file your tax extension for you. So if you have signed your engagement letter but have not booked your tax prep week, we will file that extension, and that is the case for most CPAs out there. They will file that extension for you.
00;03;40;17 - 00;04;12;18
Danielle Hayden
You know, it is archaic for the IRS to think that CPAs can possibly accurately serve all of the business owners and individuals who need their returns completed in this window. And the IRS understands that, honestly. They're not saying that everybody has to be filed by the deadline. They're just saying they want their money by the deadline. So the IRS wants their money by April, which is why you have to pay your estimated taxes with your extension.
00;04;12;21 - 00;04;39;01
Danielle Hayden
The IRS does not say that you have to file. You just have to file the extension and pay your estimated taxes. And the IRS gives us time, both you as a business owner, to compile what you need, and us as a accounting industry, to show every single one of our clients the time and attention that they deserve. You need to ensure that all of your deductions are captured.
00;04;39;07 - 00;04;47;14
Danielle Hayden
You need to understand your tax return, and we can only do that by slowing things down and taking our time throughout the year.
00;04;48;09 - 00;05;01;00
Aubrey Philipp
Before we continue a quick favor. If you've found value in this show and want us to keep growing with bigger guests and more strategies, please rate and review on Apple or Spotify. It really helps. Thanks for listening!
00;05;01;09 - 00;05;29;18
Danielle Hayden
Now here at KSA Tax Partners we use scheduled tax weeks. So one of my biggest pet peeves was submitting tax documents into a black hole. You submit all of your documents into a portal and you receive no updates or no idea when your return is being finalized. Many firms treat returns as a first come, first serve basis with no clear communication, and this leaves you as a business owner, waiting in limbo.
00;05;29;18 - 00;05;59;13
Danielle Hayden
And we do not want to do that. We have built a better system. We have scheduled tax weeks, so you know exactly when your return will be reviewed. We have tax prep calls so that we can talk to you about the specific deductions and things that you need to have captured in your return. We provide every single one of our clients with a review video, so that you can go through your return and ask any questions that you have.
00;05;59;14 - 00;06;26;04
Danielle Hayden
There is no last minute scrambling. You know exactly when your tax week is so you have the time to get your statements and files uploaded before your tax week. You have time to get your bookkeeper the information that they are waiting for to ensure that your return is accurate. The days of transactional, mass rushed filings and just sign here
00;06;26;04 - 00;06;57;17
Danielle Hayden
Tax returns. They are long over. We are slowing things down. We are prioritizing support and we are making sure that you understand before anything is submitted. Tax extensions can be a smart business decision. The old way of doing taxes and rushing around before April, submitting incomplete financials and hoping for the best. It is completely outdated. Smart business owners file an extension when they need more time,
00;06;57;20 - 00;07;25;21
Danielle Hayden
they pay the estimated taxes by April to avoid those nasty penalties, and they work with team members who value accuracy over speed, that value accuracy over fancy tax strategies that leave you at risk for an audit. We are changing how business owners approach tax season. No more rushed filings, no more mystery wait times, and no more signing returns without understanding them.
00;07;25;23 - 00;07;51;08
Danielle Hayden
Taxes and tax season should work for you, not the other way around. So file your tax extension. Pay your estimated taxes. Do take the time that you need to compile all of your statements, all of your K-1s, all your statements, all of your 1099s. Make sure you have everything that you need. Communicate with your bookkeeper. We are often waiting for our clients.
00;07;51;09 - 00;08;18;01
Danielle Hayden
We have a project management system reminding you of all the statement requests that we need from you. Please respond right away so that we can get your financials completed and ensure that you are ready for your tax prep week. If you have more questions on tax extensions or you need support, go to KSATaxPartners.com to learn more.
00;08;18;03 - 00;08;41;10
Danielle Hayden
If you are a business owner who needs a money team, I invite you to go to KickstartAccountingInc.com or click the link in the show notes and come and book a discovery call. The Kickstart Accounting, Inc. team and I are here to be a resource for you on your entrepreneurial journey. We want to take bookkeeping off of your plate and help arm you with the information you need to grow and thrive in your business.
00;08;41;11 - 00;09;00;22
Danielle Hayden
Don't wait! Click the link below and let's get started!