Expanding a business (or just staying afloat) takes money. One can bootstrap a venture for only so long before more cash is needed. Unexpected expenses (or opportunities) arise. As they say: it takes money to make money.
So? What does one do when personal funds are low, the credit cards are maxed out, and traditional lenders decline your loan requests? Raising cash is never easy, but here are two of the dumbest ways to fund your business venture. Surprise! They each come from taxes!
Sales tax. Your business may collect sales tax on your sales. If so, you are working for the state. This is not your money. You are merely holding it for the state. The amount you collect has nothing to do with your profits. Sell your stuff at a profit or a loss. It doesn’t matter. Sales tax is based on the sale.
Do not touch these funds. It may take a little while for the sales tax police to catch up with you, but they will. Not only are the sales tax collectors the most unreasonable folk on the planet, their powers are amazing. I have seem businesses shut down rather than allowing the business to repay the owed amount over time. Further, many states require a tax responsible person. That person – you? – assumes a personal obligation for the sales tax. They will go after you. It is just not worth it.
Employee withholding. Got employees? Pay them? You need to withhold some money from their pay for various taxes. You also need to remit those funds to the various taxing folk on a regular schedule. Use this money, and you are royally over!
Now you are not merely taking the government’s money, you are stealing from people. Lawsuits, fines, penalties and, perhaps, jail time will quickly follow.
Be smart. Never mess with these two. Believe it or not, the collectors at the state and federal income tax departments are actually more understanding. They just want to collect what they are owed. These two groups will hurt you to pass on a message. Hear the message and get your funding some other way.