Christmas is just around the corner, and that means soon we’re going to be a mere four months away from tax season. For the heads of large, multi-national corporations, this is just another period of the calendar. However, for small business owners, it’s a time where all kinds of headaches and difficulties spring up. If you’ve recently had a look at your books, you may realize that there are storm clouds on the horizon. Here are some solutions to some of the most common business tax problems.
Inability to Pay your Debt
You’d be surprised at the amount of business owners who make one or two bad calls in their cash flow management, and end up being simply unable to pay what they owe to the IRS. This is an exceedingly frustrating position to be in for obvious reasons, and can often be the start of various other problems that will do even more damage to your finances. If you find yourself in this position, then offering a compromise could be the answer to your tax dilemma. Here, you hire the help of a tax professional to negotiate with the IRS on your behalf, who will hopefully be able to settle your debt for considerably less than what you actually owe.
Levies and Liens
Account levies, and federal tax liens, are particularly aggressive actions that the IRS can take in order to penalize you, and then collect the sum that you owe without you having to pay the IRS directly. This tax lien will be a serious black mark on your credit score, and make it close to impossible for you to obtain any kind of loan in the future. An account levy, on the other hand, will permit the IRS to draw money directly from your financial accounts. Again, the solution to this issue will usually depend on some professional assistance and representation. Depending on certain aspects of your business’s cash flow and your personal credit history, a tax professional may be able to reverse these actions by the IRS, and outline a plan for you to address your tax debt issues.
Interest and Penalties
If you miss a tax deadline, even if it’s your first offense, you’ll immediately start to incur interest and penalties from the IRS. Therefore, if your back taxes have gone unpaid for some time, you probably would have amassed a significant amount of tax debt already. Like with any kind of debt, the longer you take to pay it off, regardless of what it takes to keep your business afloat, the larger your debt will become overall. The best solution for significant penalties and interest is what’s known as penalty abatement. Here, a negotiator or attorney will be able to reduce your penalties, and therefore grind down your overall debt significantly. If there’s been a mistake by the IRS, administrative waivers, or you can demonstrate reasonable cause to qualify for abatement, then there could be a light at the end of the tunnel!