For a business owner, few things are more stressful than receiving a tax bill when the money simply isn’t there. 
Perhaps customers haven’t paid on time. Maybe cash flow is tight. Unexpected expenses have put pressure on the business. Whatever the reason, finding yourself unable to settle a tax liability can be an extremely uncomfortable position.
But ignoring the problem is rarely the answer.
Don’t ignore the tax bill
When a business doesn’t have enough cash to pay its tax liability, the first instinct may be to put the notice aside and hope the situation improves.
Unfortunately, this can make the situation worse.
Interest, penalties and additional complications may arise when tax obligations aren’t dealt with appropriately.
The better approach is to understand exactly what is owed and what options may be available.
There may be solutions
Depending on the circumstances, taxpayers may be able to explore options such as a payment arrangement with SARS.
The appropriate solution will depend on the business’s financial position, the nature of the tax debt and whether the relevant requirements are met.
This is why getting advice early can be valuable.
Cash flow and tax planning go hand in hand
A tax bill shouldn’t come as a complete surprise.
Good bookkeeping and regular financial reporting can help business owners understand what is happening financially throughout the year — including whether sufficient funds are being set aside for tax obligations.
Understanding your numbers gives you the opportunity to plan before a cash-flow problem becomes a crisis.
Don’t wait until it becomes urgent
If your business is struggling to meet its tax obligations, the worst thing you can do is pretend the problem doesn’t exist.
Understand the numbers. Understand your options. Take action early.
RECRO Business Services can help you stay on top of your financial records and tax obligations, giving you greater clarity and confidence when making business decisions.
Don’t let a sticky financial situation become a bigger problem than it needs to be.
