What If I Can’t Pay My Tax Bill?
So…you made a bunch of money in your business last year (yay – congrats!) But, you didn’t have a tax strategy or plan in place (which we should fix for you for this new year, btw). And now, it’s April 15th and you have a tax bill rolling in.
We see this a lot with our new clients. The first thing I want to tell you is that it’s totally ok. You won’t get any shame or judgment from us, I promise.
Sometimes a client will tell us they are going to run a flash sale to pay off their tax bill. Or, that they started saving for taxes this new year, so they are going to use that cash to pay that tax bill. Or dip into next month’s cash flow funds to pay this bill. Most of the time, I advise against this.
Don’t use today’s money to pay last year’s tax bill.
If you do, many times you will find yourself in the exact same place again next year. Where you had sales this year and used that cash for last year and then you don’t have the cash to pay for this year’s bill. It’s a cycle that is really easy to fall into and I want you to stop that now. If you find that you are always feeling behind with your tax bill and don’t ever feel like you have the cash to pay it, this is likely what’s happening with you.
If you have a tax bill from a prior year (or anticipate you will have one for this year) get a payment plan set up for that balance. Both the IRS and your state will offer payment plans. Will you pay a little bit of interest and penalties on it? Of course, but they really are minimal. And then you can make smaller monthly payments against your balance to get it taken care of. We help our clients with this paperwork all of the time – it’s not scary and actually super easy and in many cases can be done totally online without even having to talk to anyone.
Then, implement your tax strategy & savings plan today so you are saving cash from today’s sales to pay today’s tax bill. You can always pay off that payment plan balance early, but this way you are only committed to that small monthly payment and you can finally get ahead and feel like you are taking proactive control of your taxes. This switch can be truly life-changing.
Want us to help you with this? Book a call with us today and we will help you get it all sorted out!
This is provided as information only and as a starting point for a conversation with your own legal and accounting team, this should not be considered legal or financial advice. All of these decisions are based on a number of factors and we cannot guarantee that you will experience any specific results based on any information provided. Please speak with your own retained professionals to ensure that you are making the best decisions for your business & personal situation.