Though it may be natural to procrastinate when it comes to preparing your annual taxes, it is generally better to get started sooner rather than later. Tax laws and regulations for filing change each year and starting early can give you enough time to make sure you are up to date.
For better or worse, more than 50 small business, finance-friendly tax breaks expired this year. An important one to be aware of is the change to the IRS section 179 deduction. While you used to be able to deduct up to $500,000 for equipment financing costs, this amount has dropped drastically to a mere $25,000. According to Forbes.com, other expired tax credits for small businesses include the Wage Tax Credit for hired Reservists, the Work Opportunity Tax Credits and the Research & Development tax credit. It is important to familiarize yourself with these changes so you can prepare your records accordingly.
Use Invoice Factoring to Pay What You Owe
You can also save yourself money in the long run by preparing early so that you will know if you need to file for an extension. Most requests for extensions are granted by the IRS provided that they are filed using the right forms and within the stated deadlines. If you need more time make the payments that you owe, it is better to notify the IRS in advance.
Contrary to popular belief, the folks at the IRS are willing to work with you to set up a more affordable small business finance plan to meet your obligations. They are, however, less willing to do this if you file late and then can’t pay what you owe because you haven’t secured small business financing.
Factoring Companies Can Help You Meet Your Payment Deadlines
If you owe the government money, you can work with a number of commercial lending institutions including invoice factoring companies to get the cash you need to make timely payments. Though it will more than likely cost you more up front for factoring receivables or equipment leasing, this can cost you less in the long term when you consider IRS late penalties.
Whatever you do, don’t go the Ty Warner route; the Beanie Babies creator is currently facing two years of probation for tax evasion on $24 million. In addition to paying back taxes of $16 million, he must now pay $53 million in civil penalties.