Fragile, handle with care... Owning your own business, being your own boss; for many of you this is the American Dream. But that dream can turn into a nightmare because the IRS takes a special interest in small business owners. Why? Your business is an easy mark for an IRS-hitman.
Why you? There are plenty of reasons we can come after a business, but the most common reason is because you did not file your quarterly 941 payroll tax forms. On your employees' paychecks, all that money that gets taken out for taxes... as the employer, you owe the IRS that money. And you better pay it on time, every three months, or else!
Too often, a small business owner will take that tax withholding money that should go to the IRS and use it towards the business, especially if their finances aren't too good. Many business owners promise they'll make it up next quarter; but the next quarter comes around, business still isn't good... you see where I'm going with this.
It's time to pay the piper. As soon as you miss that first quarterly payment, interest and penalties begin accruing immediately. Even if you manage to pay back the money on the next quarter, you still have the interest and non-filing penalties to pay too.
Believe me, it adds up quick too. When I was an IRS-hitman, we would be at your door within a year ready to start seizing first equipment for your business, then furniture. And if you still owed, we shut you down and took the proceeds from the sale of all your stuff. If that still didn't cover the debt, we would start seizing your personal accounts and property.
Stay in Compliance! When you're a new business, it is really tempting to use the payroll tax withholdings to make improvements to your business rather than have to borrow more money from a bank or creditor. But you're gambling with Uncle Sam's money. Even if it might make your business suffer or even cause you to lose your business, it's a lot better to have something like that happen and not have an IRS debt on top of it.
Now you have the smoking gun... Use it!.
Labels: Business Tax, Payroll Taxes