What to Do When Your Business is Facing Financial Trouble: A Tax Perspective

Running a business comes with inevitable ups and downs. When financial trouble hits—whether from declining revenue, unexpected expenses, or economic shifts—it’s easy to feel overwhelmed. But before panic sets in, know this: there are steps you can take to stabilize your business and navigate financial hardship, especially from a tax perspective.

At Velin & Associates, Inc., we’ve helped many business owners regain control during tough times. Here’s how to approach financial difficulties with smart tax planning and guidance.

1. Don’t Ignore Tax Liabilities

When cash is tight, it’s tempting to delay tax payments or skip filings—but this often leads to bigger problems like penalties, interest, or IRS collection actions.

What to Do:

• Always file on time, even if you can’t pay the full amount. This reduces penalties and keeps you compliant.

• We can help you apply for IRS payment plans or explore temporary relief options to reduce immediate financial pressure.

• In some cases, we may even be able to help you qualify for an Offer in Compromise, settling your tax debt for less than you owe.

2. Assess and Prioritize Your Debts

Not all debts are created equal. Tax obligations—especially payroll taxes—should be addressed first, as they carry significant penalties and legal risk.

What to Do:

• We help you evaluate all your outstanding liabilities and create a repayment strategy that minimizes exposure and legal risk.

• We can also negotiate with creditors or lenders to create more manageable terms where possible.

3. Reevaluate Your Business Structure

In times of financial stress, your current business structure may not be the most tax-efficient or protective.

What to Do:

• Our tax advisors will review your entity type and recommend structural changes that may reduce your tax burden or limit liability.

• For example, converting to an S-Corp or LLC may create tax savings or improve your financial flexibility.

4. Explore Available Tax Relief

You may be eligible for tax relief programs related to natural disasters, economic downturns, or emergency declarations.

What to Do:

• We stay on top of all IRS and state-level relief programs and can help determine if your business qualifies.

• This may include deadline extensions, penalty relief, or even tax credits that improve cash flow.

5. Get Your Books in Order

Poor or outdated bookkeeping can prevent you from seeing the full picture—and delay critical decisions.

What to Do:

• We provide bookkeeping cleanup services to bring your records up to date.

• With accurate financials, you’ll know where the money is going—and where savings can be made.

• Clean books are also essential for tax filings, loan applications, or restructuring negotiations.

6. Consider Restructuring or Downsizing

Sometimes the best way forward is to temporarily scale back to protect long-term viability.

What to Do:

• We analyze your financials to identify your most and least profitable services or products.

• We can assist in developing a restructuring strategy that reduces overhead while keeping your business compliant and operational.

A Smarter Way Through Financial Stress

Financial difficulty isn’t the end—it’s a turning point. With proactive tax strategy, clear guidance, and the right support team, your business can recover and rebuild stronger than before.

At Velin & Associates, Inc., we help business owners take control of their financial future. If you’re facing tough decisions or struggling to keep up with taxes, let’s talk. We’ll help you find the best path forward—with confidence and clarity.

📞 323-902-1000
📧 dmitriy@losangelescpa.org
🌐 www.losangelescpa.org