Cash Flow Problems Today Lead To Tax Problems Tomorrow: What to DoInk Well Mag August 7, 2015 0 COMMENTS
Most business owners will encounter trouble with cash flow at some point over the course of operations. Often times, the problem is unavoidable and unforeseeable — a long time customer may go bankrupt, a key client may start buying less and paying more slowly, important equipment might break down, or an economic recession can suddenly cause things to spiral downward.
As if all these potential difficulties weren’t enough, there is also the possibility of encountering tax problems down the road.
Getting the Help of an Expert
As a business owner, it is important to understand how the decisions you make in managing your business affect how much tax you’ll owe each period. Researching every possible tax problem and understanding the root causes may be impossible to do, however.
According to the experts at TannerCo.com, you need the support of a partner who specializes in business tax preparation and consulting. They can flag existing and potential tax problems, as well as help you determine the source of the issues.
Even with the help of an expert, however, the responsibility of taking action is ultimately on you. What it all comes down to is that you are the one who pays taxes at the end of day.
But what if you don’t have the cash to do so? Cash flow problems have sweeping implications, and the risk of facing tax problems in the future is one of them.
What You Can Do
Forget taxes for a moment. The small business owners who have the most problems when it comes to their cash flow are those who make purchases without thinking how each would fit into the budget. Of course, you need to create a budget in the first place. Take time out to sit down and draft one — and make sure you have enough money to cover all necessary costs, especially your taxes.
Remember this, too: the highest interest you will ever pay is on tax penalties from the government, which could be 18% or higher.
So do yourself a favor — work with professionals and start addressing your cash flow problems right now, so that you can avoid costly tax problems you might encounter.