Running a small business is no easy feat, and managing your small business finances – particularly your taxes – is likely every business owner’s least favorite task. Yet filing your taxes year after year is a necessity. Even if you had a bad year and you’re worried you may owe money to the IRS, you have to file your taxes.
Failing to File Practically Ensures an Audit of Your Small Business Finances
One big yet common mistake small business owners make is failing to file a return or filing a return late. They may think, “I didn’t make enough money, the IRS won’t even notice.” Others may truly be in the dark about their small business finance and tax responsibilities. Regardless of your intent, the IRS will penalize you and penalize you harshly in fines and high-interest rates if you do not file (or file late).
So what are small business owners to do when they owe the IRS but are unable to pay? The best thing to do is to contact the IRS as soon as possible and let them know your situation. No, really. Don’t run and hide. Don’t play dumb. Contact them, file your return as is (or ask to file an extension) and see if they can set you up on month-to-month payment plan. A few years ago, the IRS created some new options for struggling business owners to help them pay their taxes recognizing a payment plan is better than non-payment.
Get Cash with Business Loans or Factoring Receivables
Other small business financing options for obtaining cash to pay the IRS include obtaining a small business loan. If you have sufficient assets to put down as collateral, have a good credit score and have a record of business growth, invoice factoring services can be used to pay your taxes.
Don’t Make Yourself an Easy Mark with Poor Recordkeeping
Though it may be unfair, some small business owners feel they are unduly targeted by the IRS for audits. Some tax lawyers believe the IRS, in a heavy-handed fashion, goes after these small business owners believing they don’t accurately report their earnings. With so many classifications and tax rulings, taking care of small business finances and taxes is no small task. Careful recordkeeping – and hiring the help of a tax professional who specializes in small business finance – is a good idea.