Your Colorado Business Has Multiple Debts, Including Money Owed the IRS: How to Stop the Bleeding

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Debt is a common concern for Colorado entrepreneurs. Nationwide, a noteworthy Experian study reveals that the average small business owner holds a whopping $195,000 in debt. These obligations often come from multiple sources, including the IRS.

When dealing with business debt, it can be difficult to know where to begin. Keep the following in mind as you determine how to proceed:

Assessing Your Business Debt

Before you can prioritize between different types of business debt, it helps to get a better sense of the big picture regarding your organization’s financial status. This means determining the full scope of business debt, including its many sources, interest rates, and current payment plans. You’ll also want to determine whether any creditors are currently taking collection action against your business.

How to Choose Which Debt to Handle First

A variety of factors should be taken into account as you determine which source of debt warrants the most aggressive action. The amount of debt and current interest rates may be top concerns. Be sure to also consider potential solutions, such as installment payments.

Take a close look at the consequences of not handling specific types of debt, as these tend to vary significantly from one creditor to the next.

When to Pay the IRS First

In many cases, your priority will be IRS debt — especially if you owe employment taxes. After all, your willful failure to properly collect and remit payroll taxes is technically considered a federal crime.

If you go too long without taking care of this debt, you could suffer harsh consequences such as the trust fund recovery penalty or, in the most severe cases, jail. As such, it’s in your best interest to seek assistance from a tax expert.

If you’re struggling to get a handle on your various sources of business debt, the Highland Tax Group can help. Contact us to discover your options for managing IRS debt.