The one place that you should never borrow money from
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Here’s some good advice from the iowabiz.com site about the worst place to borrow money.
[The 2% IRS penalty referred to below is equal to an APR of about 25% on a 30 day loan!]
by Joe Kristan
December 1, 2011
December 1, 2011
Every entrepreneur struggling to stave off hungry creditors has probably taken a wistful look at that pot of cash set aside from employee paychecks to send to the IRS as withholdings and payroll taxes. Some go so far as to “borrow” that money to pay other creditors, leaving the IRS hanging.
Don’t do it. It’s very expensive money.
- If you are one day late making a deposit, you have a 2% penalty; and the penalties go up as high as 15%. You also have to pay interest on the late amount.
- If the business goes under before you pay the IRS, the liability doesn’t go away. “Responsible persons” who fail to remit withheld taxes for their business can be held personally liable for the unpaid amount, even if the business is run in an LLC or corporation that otherwise shields the owner from liability.
