Tax season is a joyous occasion for regular 9-5 workers because that’s when they get their tax refund checks in. For self-employed window cleaners though, this time of year is a bit of a nightmare. This is when you find out how much money you owe to the government based on the money you earned last year. If your window cleaning company is like most other owner-operated businesses, you’re going to be in debt to the IRS.
The following tax tips will explain how to pay off tax debt for your window cleaning company.
If your tax debt is fairly high, you may want to set up a payment arrangement or installment agreement with the IRS to make small payments over time. You can do this over the phone or through the online payment agreement. The IRS will tell you how much money you should pay every month, but their initial quote may not be the minimum payment amount. If you want to know what the least amount of money is that you can pay for your tax debt, inquire about the minimum payment for your window cleaning company.
Note that the lower your payments are, the more interest will accrue and the longer it will take to pay off your debt. Some people don’t even manage to cover their interest charges with their account minimums. Pay as much as you can as quickly as you can to avoid issues with the IRS.
This may be the off season for window cleaners, but many individuals still manage to pull in solid incomes before and after tax season. If you have enough money to spare right now so you can cover your tax debt, just send a check or money order to the IRS in the mail. Pay quickly and you can bypass most of the interest that would build in your account over time.
You may be able to qualify for a business loan or personal loan for your window cleaning company. You can use this loan to pay off your tax debt and get new supplies for your company. You will still have a debt at this point, but you may be able to get a loan large enough to reinvest in your business and earn even more money next year. Assess your options and come up with the best solution for your window cleaning company.
Check out Part 4 of our tax tips series where we show you how to prepare for next year’s tax returns.