The term VDA refers to a voluntary disclosure agreement. If you’re considering whether VDA is a wise option for your business in order to backdate your business’ unpaid taxes, you’ve come to the right place. Simply continue reading to discover your options. Especially if you are the owner of a small to medium-sized business and are currently aware of your options as well as the benefits which are associated with submitting a VDA to sort out your business taxes.
Is VDA Right for Your Business? Your options explained
Opting to use a VDA:
If you’re interested in self-reporting your backdated taxes in order to try to avoid harsh financial penalties, you may be seriously considering using a VDA. If so, keep in mind that using a VDA will only be useful if you want to avoid penalties for failing to disclose and pay taxes for the past 3 to 4 years.
What happens if you opt not to use a VDA:
If you choose to forgo using a VDA and are guilty of having backdated taxes during the past four years that you haven’t disclosed and paid, if your business has its financial accounts audited by a third party, you may face harsh penalties. For this reason, it’s well worth seriously considering opting to submit a voluntary disclosure agreement.
However, if you are audited and have backdated taxes that you have not tried to manipulate or hide and show a willingness to quickly pay your taxes, you may be able to avoid paying penalties on the taxes which you currently owe the government or the taxes which you owe any states which your business is a nexus in.
Why small businesses, in particular, should use VDA agreements:
If you own and run a small business it’s well worth keeping in mind that if your business is audited, which is highly likely, the penalties which your business could be handed may seriously affect your fledgling business’ financial stability. So the smaller your business is, the more benefits there may be to signing a VDA agreement. To discover further benefits for small businesses, ensure to visit this site.
Do VDA’s give your business exemption for paying interest on your outstanding taxes:
Will you be required to pay interest on the remaining taxes which you owe if you submit a VDA to sort out your backdated taxes? Yes, while you may not have to pay a penalty on your backdated taxes, which is the major benefit of submitting one, you will still be expected to pay the entirety of your outstanding taxes as well as interest on this sum. This is so that the government does not encourage businesses to put off paying their taxes. As there still needs to be a small penalty for businesses that don’t pay their taxes on time.
So if you were curious about whether a voluntary disclosure agreement is right for your particular business, hopefully, you now have the right information to go ahead and make an informed choice.
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