Obligations, yes we all have them. Some are more pleasant than others that in turn make them easier to do.
However, with the advent of computer technology, and services such as on-line banking, one of the most tedious obligations has become a little more tolerable. Yes, I am talking about paying your monthly bills. But instead of sitting down with the ol’ calculator and checkbook, many of our monthly obligations such as the mortgage, power, water, cable television, cell phone, and the all-important bill for the fitness center that you diligently use; can be set to automatically be paid from your credit card or directly from your bank account.
But there are still a few somewhat frequent payment obligations that require you to personally sit down to calculate and allocate the proper funds. Benjamin Franklin once stated, “In this world nothing can be said to be certain, except death and taxes.” And that brings us to perhaps one of the most unpleasant obligations.
If you run a business, I am referring specifically to the Payroll Tax. All businesses are required to report and file payroll taxes using IRS Form 941 Employer’s Quarterly Federal Tax Return. You submit the form with your Employer Identification Number (EIN), or pay stiff penalties. If you do not have a valid EIN, you can apply for one through the IRS website.
You are also liable to pay fines with interest if you fail to pay your payroll taxes on time. Payroll taxes are to be reported and paid to the IRS with every payroll, or monthly, or at least every quarter. These payments can be made electronically online at: www.eftps.gov/eftps/. In certain instances, however, the IRS allows you to submit taxes on an annual basis. However, you should not file annually unless you have written permission from the IRS to do so. Annual payroll taxes are submitted using IRS Form 944.
As if fines and penalties were not bad enough, not staying current with your payments and filings could complicate or prohibit you from borrowing or completing a financing deal should you need the extra cash. The IRS takes a variety of steps to combat employment tax non-compliance and one of them is to file tax liens against the assets of a business that prevents the business owner from leveraging those assets against a loan or other financing.
At Business Finance Corporation, one of the tools that we use to help businesses acquire the cash that they have already earned is through an Accounts Receivable Factoring Plan. That is where we agree to buy your receivables (the money owed to you by your clients), for a fixed amount in advance, say $0.75-$0.80 on the dollar, and you receive the balance when the receivable amount is collected. However, if you are behind on your Employee Payroll 941 filings to the IRS, this easy option for instant cash infusion becomes more difficult. In some cases, the cash tied up in your Receivables can help you get your taxes current.
In short, if you own a business, the one single obligation that you must do on a regular basis, no matter how busy you are, or unpleasant it may be, is to pay those payroll taxes and file IRS Form 941 on time. If you’re having a hard time keeping your payroll taxes and other bills current because of cash flow problems, give us a call and talk to us about the financing plans we can put together for you.
Your Partner in Success,