How to Beat Back Small Business Tax Debt
Being in tax debt is a less-than-ideal scenario for any small business, but while it canbe a death sentence, it doesn’t have to be. There are ways out, if you’re willing to admit your mistakes and take on a little more discipline.
Tax debt is a headache with several painful pressure points. Sure, there’s simply the responsibility of paying back what you already owe. Also, back taxes can snowball in a hurry – thanks not just to the compounding effects of interest and penalties, but also because the IRS often makes its own ruling on how much you owe at that point, and that may exclude deductions and other items that would otherwise lower your tax bill.
It gets worse. Not being settled up with the IRS could actually prevent you from getting a loan or accessing other types of small business debt. And in some really nasty cases, the IRS might even seize assets to settle the debt.
So, what can you do if you find yourself suddenly facing a heap of IOUs to the IRS?
The Path to Beating Back Small Business Tax Debt
First off, don’t get bashful with the IRS. While the natural instinct might be to duck and dodge the IRS until you can take care of business, that’s likelier to work against you than for you. Staying in constant contact and being cooperative with the IRS can keep you on their good side, making it more likely that they’ll work with you on some sort of payoff program. That said, you don’t have to spill all the beans to the IRS – answer what you’re asked, but don’t divulge anything you don’t have to.
How you proceed will in some part be determined by how substantial your tax debt is. For instance, if you don’t think you can pay the current year’s taxes right away, but might be able to pay in just a couple of months, you can file an extension for another 60 to 120 days to pay. However, if you need longer than that, but the sum is $25,000 or less, you might need to apply for an installment plan. There are other arrangements in place depending on the amount due and the amount of time you need to settle your debt.
Once you do have an extension or other plan in place, paying off back taxes has to come front and center – and you may have to go to seemingly extreme lengths to do it.
It’s obvious that any excess profits should be used to pay off tax debt. But you may need to go further than that, including pushing back payments to suppliers and vendors (or setting up payment plans with them, too). An angry vendor isn’t ideal, but it beats anything the IRS can throw your way.
If any of this applies to you, it’s time to act: now. You need a partner with the knowledge to not only get you out of your current debt situation, but to make sure your business is never in that situation again. McManamon & Co. offers expert accounting services that not only will keep your company on the right side of the IRS, but even squeeze a little extra money from the tax man in coming years.
Tax debt is a serious burden that you can’t just shrug off. You need a plan and expertise – and we’ve got both. Call McManamon & Co. at 440.892.9088 or contact us online today.
Tags: McManamon, small business, small business tax debt, small business taxes | Posted in McManamon & Co., small business, small business taxes, taxes