How to deal with tax debts as an entrepreneur?
Tax debts can put a lot of pressure on your business operations. Especially when you as an entrepreneur are faced with unexpected setbacks or a fluctuating cash flow, paying the Tax Authorities can become a pinch. In this blog we discuss how to deal with tax debts and what steps you can take to get out of financial trouble.
Recognize the causes of your tax debt
Before you take action, it is important to understand why you have accumulated a tax debt. This can be due to:
- Insufficient reservation: Many entrepreneurs regularly forget to set aside part of their income for taxes.
- Cash flow problems: Fluctuating income or late payments from customers can mean that you don't always have enough cash available.
- Misjudgment of taxes: Incorrect or outdated accounting can lead to a miscalculation of the tax to be paid.
By knowing which factors play a role, you can work more specifically on a solution and prevent the situation from arising again in the future.
Contact the Tax Authorities directly
If you notice that you cannot pay on time, it is wise to contact the Tax Authorities as soon as possible. After all, they also benefit from a solution in which the debt is paid off.
- Call or write: Explain that you are temporarily unable to pay the full tax and ask about the options.
- Apply for payment arrangement: You can often make a payment arrangement, allowing you to pay the debt in installments.
The most important thing is to communicate openly and honestly. Good contact with the Tax Authorities can take away a lot of stress and gives you the time and space to get your finances in order.
Create a realistic payment plan
Have you managed to make a payment arrangement? Then it is important to draw up a realistic budget and payment plan. Take into account:
- Regular taxes: You will also continue to receive new tax assessments, so make sure you set aside enough to prevent your next assessment from also remaining unpaid.
- Personal and business expenses: Clearly map out all costs, both business and private. This will prevent you from unexpectedly having too little money left.
- Cashflow: Be realistic about how much you can pay off each month. It’s tempting to want to get rid of your debt quickly, but too high a monthly payment can lead to new financial problems.
Professionalize your accounting
Structured, up-to-date accounting is essential to prevent and tackle financial problems.
- Work with a bookkeeper or accountant: Professionals can advise you on how to pay taxes on time and correctly.
- Use accounting software: Automation can take a lot of work off your hands and help you gain better insight into your cash flows, outstanding invoices and tax reserves.
- Create periodic financial reports: By creating reports every quarter or even every month, you can quickly see where bottlenecks arise.
Prevent new debts and additional costs
Once you have a payment plan or are paying off your tax debt, you don't want to create more problems. So pay attention to the following:
- Pay future assessments on time: Set aside money immediately for VAT, payroll or income tax.
- Avoid additional assessments and fines: You can be fined for late or incorrect declarations. Make sure your declarations are correct and on time.
- Keep communicating: Has your financial situation changed? Are you not meeting an agreed term? Contact the Tax Authorities immediately.
Consider professional debt assistance
If your situation is complex, or if you have multiple creditors, it may be wise to seek professional help. A debt counselor or business advisor can help you to:
- Gain insight into your total debt position
- To draw up a feasible repayment plan
- To conduct negotiations with all creditors
- To advise on possible restructuring or debt settlement
By seeking help in a timely manner, you prevent problems from escalating and you retain control over your own company.
Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems increase and take control of your financial future today. Click on the button 'Apply for debt assistance now' and take the first important step towards peace and security for you and your company.
