What Can Be Done If My Business Owes Back Taxes to the IRS?
Taxes are a major part of what it takes to keep a business running smoothly. Unfortunately, many business owners find that their tax bills are much higher than they originally anticipated. As a result, they might find themselves unable to pay their taxes on time. This can be expensive and can cause significant damage to your business, but it doesn't have to be that way. By following the steps outlined below, you can keep your business out of hot water and avoid costly penalties by paying your taxes on time.
What Can Be Done If My Business Owes Back Taxes to the IRS?
1 - File for Bankruptcy
If you have a significant or sizable amount of unpaid taxes, you might not be able to afford to pay them. If you are unable to pay off your taxes, you might consider filing for bankruptcy. Filing for bankruptcy is essentially a form of debt relief, which will suspend your creditors and allow you to continue your business while you work on paying off your debts. This can be a great way to save your business by buying time to make sure your business is able to afford to pay your bills. During this time, you can focus on making sure your business is profitable, and you can identify why your business is struggling to pay its taxes. By using bankruptcy as a means of relief, you can find the solutions you need to get your business back on track.
2 - Reduce Your Business' Tax Bill
You can't always avoid owing back taxes. However, there are a variety of strategies you can use to lower your tax bill. One of the easiest is to delay filing returns. You can defer paying taxes by filing your taxes at a later time, and this can give you the extra time you need to make sure your business can afford to pay its taxes. You can also reduce your tax bill by taking advantage of a few of the tax deductions and benefits you are eligible for. By purchasing equipment, you can write it off on your taxes, or by making charitable donations, you can reduce your taxes.
3 - Consolidate Your Debt
Many businesses have debts other than taxes. By consolidating your debt, you can reduce your monthly payments, and you can put your money towards paying off your debts. Debt consolidation can allow you to have one manageable installment that can be paid on time every month. It can also allow you to pay off your debts much more quickly. By consolidating your debts and paying off your debt, you can find yourself with more money in your coffers that you can use to pay your taxes.
4 - Rely on a Tax Professional
Tax laws can be confusing and difficult to understand. As a result, it's easy to accidentally underpaid or overlook a tax return. If you are unsure of how to file your taxes, you should rely on a professional. A tax professional can walk you through the process and can ensure you are following all of the tax laws.
Conclusion
If you find yourself struggling to pay your taxes, you should take action sooner rather than later. If you put off paying your taxes, you can put your business in a significant amount of danger. You should immediately contact your tax professional to determine if you will be able to pay your taxes on time or if you need to file for bankruptcy.
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