Businesses face unique challenges when it comes to borrowing money and paying taxes. Unfortunately, mismanagement or misfortune in these areas can cause enterprises to accumulate thousands of dollars in debt.
When this happens and a company can’t pay what it owes, the settlement could be an option.
These are five aspects of tax debt settlement and how it can benefit a business.
Meet the Criteria for Debt Settlement
The first step to pursuing a debt settlement is meeting the necessary criteria. Debt settlement only applies to certain loans, for example.
Those debts must also be past due before they’re eligible for settlement. While this isn’t an ideal situation since your accounts will be overdue, a settlement is preferable to letting business debts continue to go unpaid.
Get Ahead of Your Debts and Taxes
One unique problem for business owners is that new debts and taxes accumulate every year. What may start as affordable payment plans to manage your debt in your first years in operation can quickly snowball into a sum that either claim any tax relief you’d hoped for or leaves you in the red in terms of repaying your debts.
You can negotiate with creditors — even the IRS. A debt settlement agency can also help you work through this process.
Settle for Less Than You Owe
The major benefit of the settlement is getting out of debt for less than the amount you actually owe. This is possible through negotiation with your creditors. The only drawback is that you must have enough money available to pay the new negotiated amount. If this isn’t an option, you might need to save a while before pursuing a settlement.
Note that if you need to settle a debt with the IRS, repayment plans are an option. The IRS, like other creditors, is eager to negotiate if it means they no longer have to worry about tracking missed payments. There’s no guarantee your debt can be settled, though, and some additional fees may apply if working with a debt relief agency.
Get Out From Under Late Payments and Mounting Debt
The major benefit of debt settlement for businesses and individuals alike is that you can pay off your debts for less than what you owe. For companies, this can make the difference between shuttering entirely or staying open for years to come.
Get a Fresh Start
The major benefit of debt relief programs is the opportunity for a fresh start. Though a settlement will affect you negatively in terms of business credit, it’s a better option than allowing an account to continue running late, accruing interest and penalties. Also, a settlement will stop additional damage to your credit.
If you’re a business owner willing to do anything to keep your doors open, and you find yourself in a position where debt settlement could work for you, take the option seriously. Many entrepreneurs who have found themselves drowning in commercial debt have found relief through this path. Consider all your options, and reach out to a debt relief agency for more information.
Are you dealing with tax debt settlement for your business?