What Can You Do If You Are Dealing with Back Taxes

If you asked anyone who ran a business before or is running one now, they'd tell you the same thing: it takes a ton of time and effort, thanks to the daily responsibilities. As such, some tasks tend to take the back seat in the grand scheme of things, and, unfortunately, some of these tasks include paying taxes. 

As you might know, you must always meet your tax obligations. If you fail to do so, you waste money, time, and even face the consequences. That being said, it is not too rare to run into situations where you have back taxes that you need to pay off. 

If you are wondering what happens to a business that still owes back taxes and what you should do to overcome the problem, keep on reading:

What Happens to a Business with Back Taxes?

As you might know, your business pays taxes every quarter. Some businesses are familiar with the requirement to pay them quarterly, and to do so, they have to make sure that they have enough funds to meet their obligations.

If, however, there is extra tax owed or you cannot find or have any funds to pay off the taxes, you can end up dealing with a huge problem.

If you are running a business that falls under a certain size and does not pay your taxes in a timely manner, you will be subjected to the accrual rules. This is a rule that means that you will end up paying the tax if you are operating during the given year.

If you do not pay your taxes within 90 days, it means that you are subject to penalties that involve a daily interest rate of 0.5% of any unpaid taxes.

To make matters worse, you will be responsible for this interest every month until you pay off your taxes.

This rule remains in effect for any business that does not pay its taxes. It is a rule that applies to the smallest of businesses and the biggest ones alike. As such, the penalties for not paying taxes are not something that you should deal with in a laissez-faire fashion.

What Can You Do If You Have Back Taxes for Your Business?

If you find yourself in a situation where you have back taxes for your business, you should not open the doors of your business, walk away, and hope that this problem resolves itself.

Instead, you need to assess the situation and determine whether you can manage to pay off the taxes yourself or if you need assistance.

If you have the funds, you can always pay off the back taxes yourself. This is the simplest way to deal with the problem, but it is not necessarily the most cost-effective way.

If you do not have the funds or if you cannot pay off the taxes yourself, you will have to rely on another method.

You can sell your business and square off the debt that way. If you do not want to sell your business or if this option is not available to you, you can always do a payment plan. This is a rather simple solution that allows you to pay off the taxes in a timely manner.

Conclusion

In the end, you want to make sure that you are not endangering your business by paying the back taxes. If you can pay them off, you should certainly think about doing so. If you cannot pay them off, you can always get assistance from a tax preparer. They can help you figure out a solution to pay off your back taxes, allowing you to finally be set free from such burdens and focus on growing your business.

Tottax offers tax services for individuals and businesses to stay tax-problem-free. If you need help with your business taxes in Denver, work with us today!