As a small business owner, you know there are countless joys and benefits to being your own boss. You’re likely also aware of the many headaches and challenges that go hand-in-hand with running your small business.
If you’re overwhelmed by a sea of back taxes, then you know exactly how tough it is to enjoy your business, much less stay motivated to achieve success.
Back taxes owed to the IRS can be a looming presence that is both defeating and debilitating for many small businesses in the US. If you can relate, read about these ideas to help your small business pay off back taxes.
Hire a Professional
When you’re over your head with delinquent taxes, it might be time to hire a pro to help out. Obtaining a small business accountant can provide a new outlook on the situation.
An accountant can assess your business, set up a budget, and also make suggestions as to how to dissolve those tax debts once and for all.
Furthermore, a qualified accountant can establish a financial plan to keep your small business on track for future tax seasons, so you won’t be straddled down with tax debt going forward.
Contact the IRS
It’s been said that the only inevitability in life is death and taxes. While that’s a grim view, it’s certainly the stark reality. If your small business owes back taxes to the Internal Revenue Service, the worst thing you can do is ignore or avoid this harsh reality.
Your best bet is to contact the IRS. Failing to communicate or respond to IRS notices could lead to devastating penalties such as seizing of business assets, foreclosure of property, or even jail time. Sidestep this pitfall by reaching out to the IRS and explaining your situation.
In most cases, you can set up a payment plan with the IRS. If eligible, your business might even be able to negotiate a settlement with an IRS compromise offer.
Practice Smart Budgeting
If your small business struggles to make ends meet, it might seem impossible to muster a budget, much less manage money that isn’t in the till. However, even the most constrained financial situations can benefit from mindful budgeting. Start by scrutinizing your business spending. Cut out any ancillary or unnecessary expenses.
Next, take full advantage of every discount you can get your hands on. Research different suppliers to discover if you might be able to get a cheaper price for items your business needs. Use discount codes and coupons whenever possible.
Also, consider enrolling in membership programs that provide discounts on certain purchases. You get the idea. The single most effective way to budget is to be aware, make cutbacks where you can, and save money any way you can.
Establish a Savings Account
While we’re on the topic of budgeting, your small business can benefit from a dedicated savings account. This account should be utilized exclusively for paying back taxes every month. Any extra income received by your small business should go into this account. Establishing a dedicating savings account will help you gain structure as well as get control over reducing tax debt owed by your small business.
Consider a Tax Relief Service
If your small business’s back taxes are mountainous, you might benefit from seeking help from a tax relief specialist. These are companies that negotiate with the IRS, and represent your business with the goal to pay down delinquent taxes. In some instances, some tax relief companies might be able to reduce the amount owed to the IRS.
While these tax services can be helpful if you’re financially overwhelmed by tax debt – be aware that not all tax relief organizations are created equally. To explain, some of these companies aren’t always legitimate, so do thorough research to ensure a tax relief company can deliver on its promises.
You should also know that tax relief services won’t come cheap. They may reduce the amount you owe, but they will tack on their fees for services rendered.
In conclusion, coping with small business back taxes doesn’t have to be the end of your business. Your best strategy for approaching tax debt is to stay calm, make a plan and stick to it. Be reasonable about expenses, and stay focused. Communicate with financial professionals and the IRS. In time, your business should be back in the black.