Invoice Factoring Companies Help Small Businesses with 2011 Taxes
It is tax time - time to round up all the expenses from last year and face the music with the IRS. If you are a small business owner then you are going to be preparing this information and this year, as new Federal laws take effect, you must be prepared and make sure that your business taxes are paid or that you have worked out a plan with the Internal Revenue Service (IRS). By not paying your taxes, you are ultimately borrowing from the Government, at high rates.
unpaid taxes will garner a daily interest rate, plus a monthly five percent penalty each and every month up to five months for a maximum of 25 percent penalties. This is a heafty price to pay. For many small businesses, the most common tax payment issues come from not paying their payroll tax, and the bottom line is that failure to pay 941 payroll taxes can put your entire business at risk. It can also have a drastic effect on your assets. What's worse, if your business has to be dissolved, the IRS will still require you to pay outstanding payroll tax balances. This is why the best and only advice for tax problems is to be pro-active at all times. Ignoring it will not make it go away. If you do not have enough funds to pay your business taxes on a timely basis, then this is a strong indication your business is improperly capitalized.
The IRS has ways to deal with your situation? Fiirst they will send a letter for the tax balance due. If you ignore them, then they will assign a case worker. At this point either a payment plan is negotiated or a Notice of Federal Tax Lien is filed, and a tax lien is definitely something you want to avoid. Once the IRS puts a payment plan is in place, it is imperative that payments are made on time. If payment deadlines are not met, the situaiton will ony get worse, and you will have to start from ground zero again, and this time they may not even give you a payment plan. You could even risk of them garnishing your bank account.
With good cooperation a payment plan can be in place without having a formal tax lien. Some people have found that a factoring company can actually assist in situations where there is a delinquency. But once a lien has been levied against a company it will require written subordination from the IRS in order for any commercial finance company to even consider funding. When a payment schedule is in place, the factor may send advances from invoices directly to the IRS. This insures that payments are being made in a timely fashion per the IRS agreement. If a company has receivables, invoice factoring can help providing cash quickly to help begin paying down a tax debt. Some of the funds can be used for other expenses and some to pay down taxes owed.
tax problems can be remedied, but whatever you do, don't try to hide and ignore the IRS. It is a case where communications is imperative.
About the Author
Kristin Gabriel handles marketing for The Interface Financial Group, http://www.ifgnetwork.com , a company providing financial and factoring services in the United States, Canada, the United Kingdom, Singapore, Australia and New Zealand. IFG offers expertise in factoring, accounting, financing, law, banking and marketing.
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