April 15th is the IRS tax deadline, so it goes without saying that now is the time to start preparing your business taxes if you have not done so already.
Some business owners put off tax preparation because they fear they will end up owing the IRS money. They may also be concerned that they do not have the money to pay. If you worry your business may fall into this category, you may have more small business financing options than you realize.
How to Proceed When You Owe but Can’t Pay? Factoring Receivables Is One Choice
First things first, get your taxes done and determine once and for all how much you owe. If you are unable to pay the full amount, you should still file your taxes by the deadline and request an installment payment plan. You can also file an extension by completing and submitting a form that asks the IRS for six more months to get your files in order. You will be financially penalized much more severely if you do not file on time (or do not file for an extension), and then ask for some latitude later on.
Both of these options are legitimate ways to postpone or break down your payment to the IRS. Either way, however, you still must make the payment, and you may be subject to significant interest and late fees for failing to do so. Worse than fees, your business may also come under scrutiny and runs a higher risk of having to undergo an audit if you fail to file your taxes.
Don’t Panic! Factor Your Receivables Instead
If you have assets or current receivables, you can partner with a factoring company to collect an advance on them so you can pay the IRS on time. If you are granted the courtesy of a monthly payment plan by the IRS, this may align with factoring receivables. This way, your business will not feel the impact of the payment as drastically because it will be spread out over time. Other small business finance options may include taking an advance on your credit card.