Cover Upcoming Taxes With a Working Capital Loan

September 20, 2023 Tim Quinn

Cover Upcoming Taxes with a Working Capital Loan

As we head into that last quarter of the year, it’s time for business owners to shift their focus towards preparing for the upcoming business taxes due in Q4. While preparing for taxes can be a daunting task, with careful planning and organization, you can navigate it smoothly and even find opportunities to optimize your financial situation. Consider how a Working Capital Loan can help free up your cashflow for daily operations and other initiatives, while you cover any potential tax payments in a timely manner. Some business owners may be wondering how they are going to cover those tax payments, while some just wish they could spend the money on inventory or growing their business. The answer for both scenarios lies within Working Capital Loans.

Using Working Capital Loans to plan for and pay upcoming tax payments can be a prudent financial strategy for businesses. Here’s a step-by-step guide on how to do it effectively:

  1. Assess Your Tax Obligations: First, determine your upcoming tax obligations. This includes income tax, payroll tax, sales tax, and any other taxes your business is responsible for. Make sure you have a clear understanding of when these payments are due.
  2. Calculate the Loan Amount: Calculate the total amount of taxes you need to pay. This will be the principal amount of the working capital loan you’ll be seeking.
  3. Evaluate Your Working Capital Needs: Assess your working capital needs beyond tax payments. Consider other operational expenses, such as payroll, rent, inventory, and utilities. Calculate the total working capital required to keep your business running smoothly.
  4. Apply for a Working Capital Loan: Express Capital has a smooth and transparent application process and can even fund your loan the same day. We also offer a true business loan in many states, which means you can use it as a tax write off as well. When looking for a business lender, ensure that you work with a funding advisor that clearly outlines if there are any pre-payment penalties and the structure of the loan. Express Capital does not have pre-payment penalties and structures each loan to the specific needs of each business. This flexibility means that your funding advisor can custom tailor your program to you so that you are not only well-informed but feel confident and comfortable with your financial strategy using working capital. Not all lenders in the space will be able to customize a funding option based on their client’s situation and offer a one-size-fits-all approach. At Express Capital we stay agile and give each client a personal funding advisor to help identify the best path forward for your business.
  5. Secure the Loan: Once approved, secure the working capital loan. Ensure that the loan terms, cost, and repayment schedules are favorable for your business.
  6. Allocate Funds for Taxes: Use the funds from the working capital loan to cover your upcoming tax payments. It’s essential to set this money aside to avoid potential penalties and interest for late tax payments.
  7. Manage Cash Flow Effectively: With the working capital loan covering your tax obligations, you’ll need to manage your cash flow effectively to repay the loan. Monitor your financial statements, sales, and expenses to ensure that you can meet your repayment obligations.
  8. Consider Tax Planning: Going forward, consider implementing tax planning strategies to minimize your tax liabilities. Consult with a tax professional to explore deductions, credits, and other opportunities to reduce your tax burden.
  9. Repay the Loan: Make regular payments on your working capital loan according to the agreed-upon schedule. Timely repayment will help maintain a good credit history and reduce the overall cost of the loan.
  10. Seek Professional Advice: If you have complex tax situations or are unsure about the best way to manage your tax payments and working capital, consult with a certified accountant or financial advisor. They can provide tailored guidance based on your specific circumstances.

Using working capital loans to manage tax payments can provide your business with flexibility and ensure compliance with tax regulations. However, it’s essential to approach this strategy with careful planning and a focus on long-term financial sustainability. Express Capital prides itself on being customer-centric with you (the business owner) at the center of everything we do. We are long-term financial partners invested in the continued success and growth of our partners. Check out our 5-Star reviews and see what other business owners have had to say about the funding process at Express Capital.

If you have any questions on how Working Capital can help your cash flow or to learn more, please give us a call at 888-513-9937.