Business Formation: Not sure which structure is right? See our Business Formation Guide for LLC, S-Corp, and C-Corp comparisons.
If you forgot to file your business taxes, file them TODAY — the failure-to-file penalty is 5%/month and compounds fast. Even if you can’t pay, filing the return cuts your penalty rate by 90%.
What to Do Right Now
| Step | Action | Why |
|---|---|---|
| 1 | Gather your business financial records | Income, expenses, receipts |
| 2 | File the return immediately (even if you can’t pay) | Stops the 5%/month failure-to-file penalty |
| 3 | Pay whatever you can toward the balance | Reduces interest and failure-to-pay penalty |
| 4 | Request first-time penalty abatement | If you have a clean 3-year history |
| 5 | Set up a payment plan if you can’t pay in full | IRS.gov/payments |
Business Tax Deadlines
| Business Type | Form | Deadline |
|---|---|---|
| Sole Proprietor / Single-Member LLC | Schedule C (with 1040) | April 15 |
| Partnership / Multi-Member LLC | Form 1065 | March 15 |
| S-Corporation | Form 1120-S | March 15 |
| C-Corporation (calendar year) | Form 1120 | April 15 |
| Estimated quarterly taxes (all types) | Form 1040-ES / 1120-W | April 15, June 15, Sept 15, Jan 15 |
Penalties for Late Business Tax Filing
| Penalty Type | Rate | Maximum |
|---|---|---|
| Failure to file | 5% of unpaid tax per month | 25% |
| Failure to pay | 0.5% of unpaid tax per month | 25% |
| Interest | ~8% annually (current rate) | No maximum |
| S-corp/Partnership late filing (Form 1065/1120-S) | $220/month × number of partners/shareholders | 12 months |
| Combined maximum penalty | File + pay = 47.5% + interest | Potentially exceeds tax owed |
Penalty Examples
| Tax Owed | Months Late | Failure to File | Failure to Pay | Interest (~8%) | Total Penalty |
|---|---|---|---|---|---|
| $5,000 | 1 month | $250 | $25 | ~$33 | ~$308 |
| $5,000 | 3 months | $750 | $75 | ~$100 | ~$925 |
| $5,000 | 6 months | $1,250 | $150 | ~$200 | ~$1,600 |
| $10,000 | 6 months | $2,500 | $300 | ~$400 | ~$3,200 |
| $20,000 | 12 months | $5,000 | $1,200 | ~$1,600 | ~$7,800 |
S-Corp / Partnership Additional Penalty
| Partners/Shareholders | Monthly Penalty | 6 Months Late |
|---|---|---|
| 1 | $220/month | $1,320 |
| 2 | $440/month | $2,640 |
| 5 | $1,100/month | $6,600 |
| 10 | $2,200/month | $13,200 |
This applies even if the partnership/S-corp owes NO tax — the penalty is for late filing of the information return.
How to Get Penalties Reduced or Waived
| Relief Option | Eligibility |
|---|---|
| First-time penalty abatement | No penalties in prior 3 years; all returns filed; all taxes paid or on payment plan |
| Reasonable cause | Illness, natural disaster, death in family, fire/casualty, reliance on advisor |
| IRS discretion | Call and ask — especially for first offenses |
| Statutory exception | Active duty military, disaster area declarations |
Payment Plan Options
| Plan Type | Eligibility | Setup Fee |
|---|---|---|
| Short-term (120 days) | Owe less than $100,000 | $0 |
| Long-term installment (direct debit) | Owe less than $50,000 | $31 (online) |
| Long-term installment (other) | Owe less than $50,000 | $130 (online) |
| Offer in Compromise | Can’t pay full amount | $205 application fee |
| Currently Not Collectible | Financial hardship | $0 |
The Bottom Line
File the return immediately — waiting only adds 5% per month in penalties. Even if you can’t pay, filing cuts your penalty rate from 5% to 0.5% per month. Then set up a payment plan and request first-time penalty abatement if you have a clean history. For S-corps and partnerships, the $220/month per-partner penalty adds up incredibly fast, so file these information returns as your top priority.
Related: I Forgot to File Taxes — What Do I Do? | I Forgot to Renew My LLC
Sources
- Internal Revenue Service. “Tax Information for Individuals.” irs.gov
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