It’s fairly safe to say no one enjoys paying taxes. Besides the burden of completing estimated tax returns during the year, along with the final tax return itself and associated schedules, paying money to the IRS is a universal negatively looked up task. Unfortunately, it’s a necessary evil of business. On the positive side, there are ways to make paying the IRS easier for your business and with some potential benefits.
Using your debit or credit card has been an overlooked option by many businesses. Even if you have funds set aside to pay your tax obligations, it very well could make sense to use your debit or credit card.
By using a credit card you are delaying the cash impact on your business. Most credit cards have a minimum of 30 days interest free if not longer. As long as you pay your balance in full, you have a 30 or more day interest free loan just by paying with credit cards instead of a check. You’ll also be earning interest on any cash you have set aside to pay the taxes when your bill does come due.
There is also a convenience factor. If you efile your taxes and pay online, you avoid the paperwork and mailing of returns and payments. You also know your return has been accepted immediately and the payment applied.
Safety and security is always a topic of discussion when it comes to online payments. The IRS does not receive nor store credit and debit card numbers, so your information will never be compromised. As well your payment is processed using standard commercial credit card networks, adding to the level of security and safety.
The IRS has approved of several service providers to help handle the payment of taxes. Sites such as www.pay1040.com allow users to submit their credit or debit card payment, specify the tax period to apply to, the form the payment belongs to, and receive confirmation immediately. You can also submit to have email reminders sent to you so you’ll never be late with a tax payment. Don’t feel comfortable paying online? Simply call the IRS and make a telephone payment using your card.
While there is a convenience fee charged by the third party payment processors, there’s still a benefit. You can deduct the fee as a business expense. To review this and other possible deductions, visit IRS Publication 535 here: http://www.irs.gov/pub/irs-pdf/p535.pdf. It is also worth noting the fees are relatively minimal given the benefits of using a card.
Your payment will never show on your debit or credit card statements with any information about what your payment relates to or what periods. Aside from a payment made to the payment processor and the amount, your privacy is always protected.
If you’ve ever mailed a check to the IRS, hopefully you requested delivery confirmation. Still you had to wait to receive confirmation back. By making a credit or debit card payment, you receive confirmation number immediately, which usually is your last step and lets you sleep at night knowing your taxes are paid and the process completed.
Still not convinced to use your credit or debit card? Possibly one of the best benefits to using your debit or credit card is the ability to earn points, miles, rewards or money back depending on what programs you belong to. Not only do you get all the benefits above, you actually get something back for paying your taxes. Earning a rebate on something you have to pay is definitely a benefit no one can argue with.
Paying taxes will never be fun and can be a stressful part of owning a business. Using your credit card for all the reasons above will help reduce the stress level dramatically, make your life simpler, and allow you to focus on running and growing your business.
Chris Benjamin founded Rogue CFO Management Consulting in 2007 after spending 12 years in the corporate world as a CFO to both public and private companies. Leveraging his experience & education, Chris currently partners with growth stage companies who are in need of CFO management talent on a part time basis to help them grow and eventually become publicly traded. In his efforts to help the small business community, Chris has also created video courses, webinars and articles to help educate entrepreneurs & CEO’s, and guide them to success.
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