The Cost of Missing an IRS Payment
"Don't hate the player...hate the game!"
It's easy to hate the IRS...
...and I get that!
However, as business owners...
...it might serve you better to think of them like a bank.
Meaning...the IRS wants to get paid...
...and they understand that not everyone has the money to pay on time.
So they charge interest & penalties.
They ALSO allow payment plans if you need to pay them over time.
Basically...avoiding them is the WORST thing you can do.
Instead...treat them like a bank.
(except this bank can send you to jail lol)
But seriously...if you need to decide between a business investment via a bank loan or credit card
...or underpaying your quarterly tax estimate...
...both will cost your Interest Payments.
But it is your job to determine, what is the lower cost and better terms for your business.
As of Q1 2023, underpaying the IRS will cost you 7% in interest penalties.
NOTE: I am NOT telling you to owe money to the IRS.
I am telling you to thoroughly understand the costs of your strategic business decisions.
Could the IRS be a lower cost creditor to you?
Perhaps...HOWEVER...
...It's worth noting that the IRS is probably the worst creditor if you decide NOT to pay!
They can can rip through more entities & asset protection structures than an ex-spouse!!
(not hyperbole lol)
However, if you are strategically using the money and want to evaluate the different ways to use capital...
...I feel that it is helpful to know what interest rates each of your vendors, credit cards, and Uncle Sam plan to charge you so that you can make the best financial decision for you and your business.
If Taxes are still stressing you out...or you want to get more organized in your business?
Let us help you!
We just launched a Program to get all your finances organized!
Business StartUp & Money Organization Program
Book a call to see how much you can save in taxes!!
Best
Pat
Disclaimer: This is meant to be educational only. This is NOT advice for your specific situation. Please consult a qualified tax or financial professional before making changes to your IRS payments.