Does Your Business Owe Taxes?

Being a business owner is hard work even under the best of circumstances. When things go wrong, however, and when you find yourself owing taxes, things get even harder. In fact, many businesses crumple under the pressure; one of the most common approaches, if you can even call it that, is just to ignore the problem and to hope it goes away. Newsflash: it doesn’t! Ignoring owed taxes just makes the issue worse and more urgent.

There are many other “wrong” things you can do as well, things that could land your business in more trouble than it is already in. Thus, when you learn that your business owes taxes, it is extremely important that you know what NOT to do.

DON’T Throw All Your Money Away

To begin with, don’t make the mistake of emptying all of your accounts and, in short, everything that you have in an attempt to take care of your little (or not so little) tax problem. Sure, paying off a large chunk of what you owe can help, but unless you can pay the full amount all in one go, which isn’t likely, you are just setting yourself up for disaster.  

Making a large payment, even if it takes everything you have, might make the IRS think you’re made of money, which will make it even more demanding when it comes to collecting on the rest of what you owe, which could flat out ruin you and leave you and your business penniless. Even worse yet, it could make the IRS wonder where you got all that cash, triggering an audit and a deep investigation into your business on-goings that you are likely unprepared for.

A much better solution is to, with the help of a knowledgeable tax adviser, work out a reasonable, consistent payment plan with the IRS to settle what you owe in a long-term agreement. Not only will this help you to avoid the problems and scrutiny described above, but it will also help you to keep your finances in check and to avoid going destitute while paying off the IRS.

DON’T Parlay Over Full Responsibility

As mentioned, it is smart to find a tax adviser/ financial adviser who can help you to work through your difficult tax situation. The key thing there, however, is to find someone who can HELP you, not someone who will take over everything for you and leave you out of the loop.

No matter what may transpire in the course of owing and paying back taxes, it is still important that you maintain control over your business. After all, it is just that- YOUR business. If you do hand over full responsibility, you could end up with a business that is unrecognizable. Most people who take full control are going to work in the immediate best interest of your business, not in its long-term best interest, so you could come back to a business that, while its taxes may be paid, is in serious shambles.

It’s best to stay involved and in the loop. Look for an adviser that will carefully explain to you what each decision means, both now and in the long-run, and that will help you to make the best possible choices for your business overall.

If you can follow these simple tips and stay involved in the process, you can avoid turning your situation into something bad and ultimately come out on top.