Businesses across northern Nevada face the annual property tax payment due date coming up on August 17. They can pay their first installment as late as August 27 without penalty. Those that miss that deadline will be hit with penalties and interest ranging up to 15 percent of the amount due.
Worse yet, the property eventually can be foreclosed.
There is another problem with not paying your taxes: It is public information. County treasurer offices publish lists of delinquent taxpayers every May. That means that your customers, competitors, vendors and everyone else can discover your delinquency. That’s something you probably want to avoid for many reasons.
Overdue property taxes are a costly mess that gets uglier the longer it is ignored. But for business owners who fear they can’t come up with the money to pay their August installment, there are options.
For starters, consider selling off unnecessary equipment that is not contributing to the growth and success of your business. Maybe you have a van, tools, office furniture or other items you can quickly convert to cash. Perhaps some aging inventory can be sold at a break-even cost.
Yes, it might hurt a little to backtrack on the progress you’ve made with your business. But a little pain now might avert a much bigger and more painful problem regarding the taxes you owe.
Another alternative is to reevaluate your budget. Now is the perfect time to take a look at your finances and cut back on any extraneous spending that could hinder your ability to make tax payments on time.
In short, free up cash to pay your tax bill by delaying any upcoming expense that isn’t absolutely necessary. Examples could include cancelling a business trip, delaying a new hire or putting off a big capital expense such as new computers or other equipment.
Talk to your banker
Another option is a bank loan. This may be tricky because odds are if you are having trouble supporting your property tax payment, your banker will look skeptically at lending you more money.
Your best bet is to have a well-thought-out plan prior to talking with your bank. Know how much you need and how long you need it. Be thorough and be truthful. Lay out your plan for settling the tax bill and keeping your business on solid footing. It might be a long shot, but it could make sense depending on your situation and your relationship with your bank.
A more extreme option is to borrow from your 401k or other retirement account. No doubt, this is not a great option and you should talk to your financial advisor before doing it. But it might be worth considering, especially if you realistically expect to be able to pay back your retirement account quickly.
Also consider asking family and friends for a temporary helping hand. This is an opportune time to utilize your connections if you are trying to get through a tough financial stretch. Finally, consider looking into a property tax financing plan. Reputable companies that can pay your tax bill and provide you with an affordable repayment plan can be found online.
Communication is key
No matter how you choose to resolve your property tax obligation, call your local county treasurer and ask for any guidance or suggestions he or she might have. As with a delinquent bank debt, your communication with local tax authorities is crucial. You need to let the county treasurer know that you sincerely want to pay the bill and you are actively working to find a solution.
Ignoring the problem will only make it worse. Now is the time to prepare for the August 17 tax payment due date.
Jack Nelson is president and CEO of Propel Financial Services, which provides property tax financing to businesses and individuals in Nevada and throughout the country.