A Big Tax Bill??? This Year the IRS has a Heart

Today, April 15, 2009, is tax day, and if you have not scrambled to file a return or extension yet, better hop to it. This has been a tough year for many, and faced with the possibility of a big bill you may be wondering what you should do. Let me clear it up… you should FILE! I’m no expert, but apparently not filing your return is a different and much bigger offense than not paying your tax bill. So even if you do not have the money experts recommend that you file. Payment plans can be worked out for the unpaid balance,and filing without payment will help you avoid fees. Another reason to file is that the IRS has stated that this year it has compassion for your recession related financial difficulties. IRS Commissioner Doug Shulman said in January that this year agents are being given new authority to waive penalties, negotiate new payment plans, postpone seizures and asset sales, for those that make good faith efforts to settle their tax debts. So, get that monkey off of your back and file your taxes or an extension. For individuals if you file an extension that gives you until August to get your ducks in a row.

Estimated Taxes Made Easy

One of the biggest things that entrepreneurs report to me keep them up at night is a hard and fast deadline where a big tax bill, an extra payroll, a hefty insurance down payment, or other big bill is due, and there is NOT ENOUGH CASH FLOW to cover it and have to borrow from credit cards or loans to make up the difference. In fact, I would say that over 50% of business owners that I talk with run into this problem regularly. One tip I have is for you is to open an additional savings account at your business bank, and physically move over a prorated amount of the bill/s that will someday soon become due, every week, or every other week. Figure out your estimates for what needs to be transferred each time, and then deposit that amount every time.
For example:

Bi-Weekly Deposits to Savings Account

Monthly 941 depositer = (average monthly deposit) / (2.165)
Large Quantity Supplies bought twice a year = (Supply cost) / (13)
Quarterly Insurance = (Insurance Cost) / (7.5)
Bi-Weekly Payroll 3 Pay Month = (average payroll plus taxes) / (13)
Quarterly Sales Tax = all of the money calculated in the QuickBooks Sales Liability account for 2 weeks.

I know this is easier said than done, but try this for just one month and you will be surprised how great it will make you feel – In control feels great! Even if you are worried that you may need that money, go ahead and transfer it, because if worst comes to worst you can always transfer it back, and if there is a money crunch, you will realize earlier that you need to make some changes