If you own a business, you know how important cash flow is for thriving a growing. While maintaining a strong cash flow is essential to success, ensuring your company has no business liabilities with the IRS is equally important. Outstanding tax liabilities can lead to collections, which can place a severe strain on cash flow with very few options, and as we’ll see, even factoring won’t be able to solve IRS liability problems.
Business Liabilities and the IRS
IRS business liabilities take many forms. Some businesses miss the window to file their 941 forms quarterly, only to find out that they owe the IRS money based on their earnings and the size of their workforce. Another reason could be not paying unemployment taxes, or income taxes – either for the business or personal income tax filings as a business owner. All of these things can send up red flags with the IRS, and they can take measures to ensure they get the payments they are due.
If liabilities are left unpaid, the IRS will typically issue a notice of payment. If the notice is ignored or lost, the outstanding liabilities are moved to the Collections Division of the IRS. Within the Collections Division, most business liabilities are handled by Revenue Officers, who will issue a tax lien against the business, which comes with a certain window in which business owners can make payments or make an appeal. If the lien is not heeded, the IRS can levy a forced collection, which could result in business owners having to divest from their operations. A lien can place a heavy strain on cash flow.
Factoring and Business Liabilities
In many cases, if the IRS has a lien against a business, using factoring to build up capital from receivable is not possible. A factor places a layer in between the business and the IRS, which is why factors will refuse to do business with entrepreneurs who have liens levied against them. Before using factoring services to boost cash flow, business owners must be transparent and let factors know about any liabilities involving the IRS.
At New Century Financial, we work with a wide variety of businesses to provide factoring services so they can accumulate the capital needed to stay in good standing with the IRS and avoid tax liens. Contact our offices today and stay ahead of business liabilities with New Century Financial’s factoring services.