Illinois is the latest state—along with California and New York—to buckle under the weight of its debt. Illinois's unpaid bills and Minnesota's late corporate tax refunds are a problem for small businesses.
Flat Out BrokeIllinois is in serious fiscal trouble. Unpaid bills will hit about $10.5 billion later this year, counting lotto winners and state university payouts.Because Illinois has no current budget, the state does not pay lotto winners. Instead it sends the winners IOUs. Yesterday, two Illinois lottery winners filed a class action lawsuit over unpaid prizes. Lotto is a small problem overall, yet symbolic of the mess the state is in.Promises, Promises
The move marks the latest effort from the new government to crack Britain’s late payments culture, which sees large firms delay paying bills, so starving small suppliers of cash.
It will enable companies to use invoice financing to get their hands on funds from unpaid bills they have issued. Businesses apply to factors and confidential invoice discounting companies who will lend crucial cash using invoices for money owed to them as security.
However many larger firms insist in contracts that smaller suppliers do not use invoice financing.
Governor Pat Quinn rammed through the largest tax hikes in Illinois history last year. On January 13, 2011, Governor Pat Quinn signed off on a 67% hike in personal income taxes and a 46% hike in corporate taxes.
The result is not what the governor thought. Businesses have fled, more have threatened to leave and Quinn responded with sweeteners. Moreover, Illinois pension plans are still the worst funded in the nation, and the state is still struggling to pay bills.
New research carried out by FreeAgent has revealed that for every working hour that an average freelancer or small business owner bills their clients for, they will actually spend an additional 30 minutes doing work that they won’t charge for.
FreeAgent’s in-house data lab analysed information from more than 30,000 of the company’s small business customers and found that – when users recorded the time they spent on work-related projects – every 90-minute chunk of time would only include an hour of “billable” work that they invoiced their clients for.
If you only studied President Obama's corporate tax proposal by reading news stories about it, you might be under a misimpression: that Obama proposed a business tax cut, and Republicans are too spiteful to take him up on it.
Over the past weekend, Italy's caretaker cabinet formally approved plans to begin paying its overdue bills to domestic suppliers and service providers. Its official arrears have aggravated underlying problems, such as access to credit by small and medium size businesses, who are the main creditors. The problems of the SMEs has also contributed to the rising non-performing loans of Italian banks.
IRS waives late payment penalties for returns containing delayed forms. If you can’t file or pay taxes on time, it’s always better to extend your return while you round up the information or the cash. The penalty for filing a late unextended return is 5%, plus an additional 5% for every additional month of late filing. The penalty
Over the last year, I've frequently lamented the United States' increasingly absurd position on corporate taxes - maintaining one of the highest corporate tax rates in the world and routinely demonizing standard international business tax practices, while other countries (like Canada) are racing to eliminate tax burdens in order to enhance their domestic companies' global competitiveness. Unfortunately, the last few weeks have produced a depressing cavalcade of similar news.