My brother sent me an email last week informing me that he had met with a firm that professes to do profitability and tax savings assessments on small companies and promised to save his company $100K the first year. My brother was wise enough to bring his tax accountant with him to the meeting and when the representative could not or would not provide any details as to how they could save the business $100K, they sent the company packing. They later found out the company has over 300 complaints filed against them with the local Better Business Bureau office.
I am on the advisory board for our local BBB office and at our last meeting, heard a story about a business in our area scammed by a firm promising to write them a business plan and set the company up a foundation which would make them eligible for thousands of dollars in government grants. The company paid $8K in fees which got them a cookie cutter business plan and no grant money.
The moral to these stories is buyer beware. There are more and more unscrupulous businesses and individuals looking to take advantage of a small business owner’s desperation. Before you sign any contract or send any money to a company promising to reduce your taxes or help you get grant or loan money, have your attorney or another trusted advisor look things over. If your cash flow is tight, the last thing you want to do is waste money in a scam.
Tuesday, August 17, 2010
Thursday, July 29, 2010
Dealing with Taxes as a business owner
We have seen far too many people losing money and suffering sleepless nights over tax issues lately. I don’t prepare income taxes myself, but we do help our clients with sales and payroll taxes and we make sure their financial information is complete and accurate for their income tax preparers. Here are a few thoughts about taxes in general.
The right to collect taxes, whether sales & use, payroll or income, is dictated by law so if you don’t pay the amount of taxes you owe, you are breaking the law.
Every business owner needs to understand what taxes they owe and when. Find a professional you like and trust and have them teach you about your taxes. You don’t have to prepare all the paperwork if you don’t want to, but you do need to know what is due and when. You have to work with your service professionals to stay within the law.
If you run into cash flow problems and you can’t meet a tax deadline, don’t bury your head in the sand! File the proper forms or returns and then contact the tax authorities and arrange a payment schedule. The IRS and state authorities want to collect their money and they will work with you. Communication will go a long way to avoid levies and garnishments and fear. Avoidance leads to penalties and interest which grow at staggering rates. We have seen cases where the interest and penalties far exceed the actual taxes owed by the time the business owner sat down with the tax agency.
Owners also need to understand that money withheld from employees’ paycheck is still technically the employees’ money and not sending it to the proper agency is considered stealing. The IRS can come after a business owner personally to collect employee portion of payroll taxes even if the business is incorporated or an LLC.
Learn about your tax responsibilities and work with your service professional to see that you file and pay on time. It can save you and your business.
The right to collect taxes, whether sales & use, payroll or income, is dictated by law so if you don’t pay the amount of taxes you owe, you are breaking the law.
Every business owner needs to understand what taxes they owe and when. Find a professional you like and trust and have them teach you about your taxes. You don’t have to prepare all the paperwork if you don’t want to, but you do need to know what is due and when. You have to work with your service professionals to stay within the law.
If you run into cash flow problems and you can’t meet a tax deadline, don’t bury your head in the sand! File the proper forms or returns and then contact the tax authorities and arrange a payment schedule. The IRS and state authorities want to collect their money and they will work with you. Communication will go a long way to avoid levies and garnishments and fear. Avoidance leads to penalties and interest which grow at staggering rates. We have seen cases where the interest and penalties far exceed the actual taxes owed by the time the business owner sat down with the tax agency.
Owners also need to understand that money withheld from employees’ paycheck is still technically the employees’ money and not sending it to the proper agency is considered stealing. The IRS can come after a business owner personally to collect employee portion of payroll taxes even if the business is incorporated or an LLC.
Learn about your tax responsibilities and work with your service professional to see that you file and pay on time. It can save you and your business.
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