Bill Fritton: If you have a payroll tax issue, it will cost you nothing to call me or set up an appointment and discuss your situation. You know, why are my certain expenses higher than they should be or why is one month way higher than another month? Let’s dig into those numbers and figure out why things are happening so if need be we can make changes and improve your cash flow.
What also a lot of people don’t understand is if you don’t pay your payroll taxes, a portion of that can come back on you as a business owner or as a president, secretary, whatever. It’s called the Trust Fund Recovery Penalty. What the IRS can actually do is come to you and assess you for the portion of the taxes that are trust funded.
It’s also a mistake that a lot of people make that if they are paying back payroll taxes, they will just send a check in. When you do that, the IRS will put it towards their best use or its best use, not yours. What people don’t understand however is that instead of trying to pay, let’s say you’re a year down the road and you owe that $30,000, the last thing you should be trying to do if you’re having a cash flow problem in your business is paying those back taxes, that $30,000. The reason is you want to pay your current taxes. Then if there’s extra money, you can go back and pay the back taxes because those penalties, that 50% let’s say for the sake of argument, have maxed. They’re no longer accruing. That 30 is going to stay at 30 other than the interest. Whereas if you end up owing another 20 for your current quarter, you’re going to start accruing those penalties all over again. You can really limit the damage by staying current as opposed to paying the back taxes.
We get into ways to do that. One of the things we do with all the businesses who come in to see us is we do a thorough cash flow analysis. We look at the financials. In many cases, our businesses don’t have financials. They don’t have good record keeping. They don’t have good book keeping. In many cases, we’ll actually [inaudible 00:01:57] and try to find a good book keeper that can keep their records for them or help them organize because they don’t manage by the numbers. They just know that money’s coming in and going out and at the end of every week or month, I have money, but now all of a sudden I don’t have money. What’s happening? We really try to stress to people that you need to manage to the numbers. You need to have cash flow statements, income statements, so that every week, every month, at a minimum you’re looking at that and comparing it month to month and seeing how your business is going, whether good, bad, or indifferent, and make changes in order to improve your cash flow.