We all have our personal taxes to worry about, but when you open your own business, you suddenly have two sets of taxes to pay. For some, the amount of business taxes they have to pay can be shocking, and for many, paying them along with personal taxes can seem impossible. If you’re a business who can’t pay your taxes on time, here are a few things you should and shouldn’t do.
Don’t avoid filing your return
Even if you know you can’t pay the full amount, failing to file your tax return can result in added penalties and interest payments. If you can pay part of what you owe, do it. Any amount you pay will lessen the interest charges you have to pay at the end. If you can’t pay it at all, the worst thing you can do is ignore your bill. Call the IRS and explain your situation. At the end of the day, the IRS is made of humans and if you explain your personal and financial situation, they may help you come up with a solution you can both work with.
Consider an Installment Agreement or Offer in Compromise
An installment agreement is an option for those who owe $50,000 or less. If you apply for the agreement and are accepted, you will be allowed to make payments of a certain amount for up to 72 months. This is great for those who can’t afford the full amount, but it does charge interest and penalties, in addition to a filing fee. An Offer in Compromise is a great option because it means the IRS will reduce the amount you owe. But getting this option offered to you is very difficult and requires a full disclosure of your business taxes.
Consider getting a loan
Although a loan is just adding to your debt, it could be a good idea for a business to consider because the interest may be significantly less than the interest charges from the IRS. You can also use a credit card to pay off some, or all, of your balance. Talk with a tax professional to better understand what these options mean, and which is the best for you and your business.
Talk with a tax professional
If the above options don’t seem right, try talking with a tax professional about your options. A professional will thoroughly review your return, and may be able to find ways to lower your payments. They can also help you speak with the IRS to explain the hardships you have gone through that have caused you to be unable to pay your taxes.
If you own a business and are unable or having trouble paying your taxes to the IRS, contact a tax professional like Levy Tax & Associates. You can reach them at 1-800-TAX-LEVY.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.