One of the biggest issues many small businesses have is collecting on overdue accounts. Your business can end up with serious financial issues if you don’t have a plan in place to make sure your customers pay in a timely manner. You have to implement formal credit policies and terms and stick by them.

Here are 6 tips to help you collect on overdue accounts:

1. Ask for deposits whenever possible. If your customers want large orders, request that they make a deposit to make the sale. These deposits should be clearly stated that they are non-refundable; this will make sure that your customers intend to pay for their purchases and you won’t have any worries about fund shortages.

2. Allow credit card payment. When you take credit card payments, you practically eliminate overdue payments. It also makes it easier for your customers to make payments, which will reduce overdue payments to you. If your customers can’t pay the total amount up front, credit cards are the best solution. They can pay a portion of the purchase price up front, then, when the product or service is received, they can pay the rest.

3. Allow both cash payments and invoices. When you accept cash, there is no risk of overdue accounts. Your sales will increase and you will have no issues with customers who can’t pay you.

4. Establish progress payments in stages. If your company furnishes goods or services over a long period of time, you can offer your customers the option of paying percentages of their purchase price in stages throughout the process of the service. Start with a non-refundable deposit, then work out a percentage as the project progresses.

5. Develop a standard procedure for overdue invoices. Your business needs to put in place a formal, written collection process when you contact customers who have overdue accounts. You should be firm but courteous. The first contact is generally a friendly reminder that payment is due, then, in 2 weeks, you should follow-up by letting your customers know they are in danger of having their account sent to collection. If, after 30, 60, or 90 days, depending on your policy, a payment has not been made, you can send the account to collections.

6.  Always be polite when indicating an overdue invoice. It’s a good idea to steer clear of harsh letters in the first stages of collection. If you start off with an angry tone, you customers may just try to avoid you altogether and you’ll risk not getting any payment from them at all. The best advice is call you customer and ask them if they have received their invoice and offer to re-send it. Generally, they are more than willing to take care of it right away, as long as you courteous. It’s also a good way to keep loyal, paying customers.

Daniel Stoica Accounting Professional

The IRS sends notices to millions of taxpayers every year, but there is no need to panic. There are 8 things you should know if you get a notice or letter from the IRS.

1. The last thing you want to do is panic. Most letters or notices can be dealt with very easily.
2. The IRS could send you a letter for any number of reasons. They could be from payment requests to changes on your account to requesting more information from you. The letters can also mean you need to contact them for account-specific reasons.
3. Every notice from the IRS gives instructions about what needs to be done regarding your account.
4. For correction notices, you may want to review the letter and make sure everything corresponds on your tax return.
5. You only need to reply to a correction notice if you you owe a payment, but not if everything else is correct in the notice.
6. If you disagree with a correction the IRS has made, you need to contact them right away. Doing so in writing is best, and explain why you disagree, and include any documentation that supports your claim. Tear off the bottom part of the notice and send it with your letter to them. Please wait at least 30 days to hear back from the IRS.
7. Generally, you can take care of any notices without having to call or write the IRS, but if you have any questions, you can call the number that is on the upper right corner of the notice. Have your tax return and the letter with you when you call.
8. Make sure to keep all letters and notices you receive from the IRS and keep them with the copies of your tax returns.

If you have questions or want more information about IRS notices or bills, you can look at Publication 594, The IRS Collection Process. Publication 17, Your Federal Income Tax For Individuals, offers information about penalties and interest. You can find both at irs.gov or by calling 800-829-3676. You may also want to speak to a tax professional.

Daniel Stoica Accounting Professional

Truckers and owners of heavy highway vehicles were notified by the IRS that their highway use tax return will be due on November 30^th, 2011. It is normally due by August 31^st.

The extension was put in place to help stop any confusion in regards to multiple filings in case Congress modifies the tax after September 30^th, 2011. Under the regulations that were recently filed by the Federal Register, the 2290 form-Heavy Highway Vehicle Use Tax Return, began on July 1^st, 2011. It applies to all vehicles that are used during the month of July, as well as vehicles that will be first used during August and September. Taxpayers are advised not to make payments before November 1^st.

To help truckers to apply for their state vehicle registrations before November 30^th, these new regulations are required by all states. They must accept the stamped Schedule 1 of the 2290 form as proof of payment. This will be provided by the IRS for the prior year, which ended on June 30^th, 2011. Federal law states that all state governments must get proof of payment of the highway use tax in order for truckers to get their vehicle registrations. Generally, once a taxpayer has filed their return and paid the taxes, the Schedule 1 is stamped by the IRS and returned to the taxpayer. States will then accept this Schedule 1 as proof of payment, but only through September 30^th. 

If anyone is registering a new or used vehicle between July and November, this new regulation will require all states to register the vehicles, without proof of payment, but only if the person who is registering the vehicle shows a copy of the bill of sale showing that the purchase was made within 150 days.

The highway use tax is used for trucks, tractors and buses with a weight of at least 55,000 pounds. Vans, pick-ups and panel trucks are not taxable because they are generally under 55,000 pounds.

Normally, the 2290 form and payments are due on August 31^st for trucks and all other taxable vehicles. The taxable amount can be up to $550 for each vehicle and is based on the weight of the vehicle. Other rules apply for vehicles with very little use on the roads, for logging, or for agricultural vehicles. It also applies to vehicles that transferred ownership during the year and were first used after July.

The IRS received nearly 650,000 2290-forms and highway use tax payments of $886 million last year.

Contact the IRS or a tax professional if you have any questions about this extension. 

Daniel Stoica Accounting Professional