Options When You Can’t Pay Your Small Business Taxes
08 Mar, 2016 / Comments: Comments Off on Options When You Can’t Pay Your Small Business Taxes / By William Mahnic
One of the worst things about tax season is stressing out about what the final number will be on what your small business owes. If it turns out that you are unable to pay your small business taxes fully, then all hope is not lost thanks to low-interest rates and tax policies that will allow your company to stay afloat. From agreements to installment plans to extensions, there are several ways that you can dramatically lower how much you have to pay. Let’s take a look at some options your small business has if it cannot afford to pay taxes this year.
Pay as Much as You Can
Your best option is to pay as much of your small business taxes as you can, even if it is not the full amount. If you can put together at least 90 percent of the total tax amount then, you can even avoid paying a penalty by submitting a Form 4868, which will give a six-month extension on paying your taxes from the time that you file. Keep in mind that the Form 4868 does not extend the time you have to pay, it just gives you extra time to file your taxes.
Use Your Credit Card to Pay Taxes
The IRS allows you to pay your taxes using your credit card through some providers. If you are using Form 1040 of 4868 to file your taxes, then you can file using a certified processor. All of these providers will charge a nominal fee for using your credit card to pay taxes. If you are using an e-file software to file your taxes like TaxCut, then they will also allow you to use a credit card.
Pay Through Installment or Agreement
You may qualify to pay your small business taxes through an installment plan created by the IRS. This option is dependent on the amount of taxes that you owe. You can go online to the IRS’s Online Payment Agreement and fill it out to use this kind of agreement. Keep in mind that the Online Payment Agreement is only available on certain days and hours.
Contact the IRS
If you need only a small amount of extra time to pay your small business taxes, then you should get into contact with the Internal Revenue Service. You can do so by calling 800-829-1040 or by going to IRS.gov. You could be given an extra 60 to 120 days to file. However, keep in mind that you will still have to pay a penalty and interest.
File Your Return No Matter What
The most important thing that you can do is to file your return, whether or not you can pay your taxes in full. You will have to pay a much costlier price if you do not file then if you do file, but don’t pay. The penalty for not filing your taxes is 5 percent of the amount that you owe per month. On the other hand, failure to pay your taxes penalty is only .5 percent per month.
Look into the Fresh Start Program
The IRS recently created the “Fresh Start” program as a way to make it easier on people to pay taxes. The program came about in 2011 and was renewed a year ago to aid taxpayers that owe less than $50,000 get approved for an installment plan that gives more leniency and longer repayment terms. Some of the changes to the Fresh Start program made it easier for small businesses to participate. For example, the taxes that a small business can owe and still qualify for the program was raised from $10,000 to $25,000. Additionally, small businesses can take two years to make payments if they do it by direct debit. The IRS does this as they are willing to aid small businesses to pay their tax debt while still holding them liable for penalties and fines on unpaid taxes.