Ten Tips for Financially Troubled Businesses
In any business there will arise a time wherein financial issues will appear.
It is crucial that the company owners and managers, now more than ever pay attention to certain factors that will alleviate specific issues.
There are many ways to go about this. The following are ten of the most important steps to take when dealing with a financially troubled business:
As the owner of the company you are liable for all the finances that the company needs to fulfill. It is important to keep up to date with the taxes and especially the paychecks of the employees. Regardless of the current financial situation in your company you will still, nonetheless be held liable for these fees and penalties may be in order if the tax authorities or IRS discover that these dues have not been paid accordingly.
As soon as you discover your financial troubles and issues you must immediately cut on your overall expenses. Large or small, all of these expenses count in totality. Realize that you do not have enough finances to pay the regular dues, so cutting smaller expenses may not exactly solve the problem but will alleviate it to some extent. Prepare a cash list and review of all the monetary funds that are owed to you and vise versa. This is also the time to collect on all the dues owed to you. Pay legal costs such as taxes and overhead as soon as possible but delay on other costs wherein you can make arrangements with the suppliers.
When your business starts bumping into certain financial issues, the business owner cannot help but make irrational actions over the incident. One of which is borrowing money. It is important to first evaluate the extent of your financial crisis before considering making loans. It is more likely that this action will put you more in debt than you are in originally so first be able to identify the problem to its core before making any drastic actions.
When business owners assess the fact that their company might make its way down to bankruptcy, in an attempt to protect certain personal assets they might try to transfer these to relatives or friends or conceal them entirely from creditors and court. This is a terrible mistake as it may add more damage to the current situation by placing the business owner behind civil liabilities and criminal offenses which include fraud. Keep things in the open and avoid hiding your assets or transferring them to others.
When you file for bankruptcy, it is important to remember that all the payments you make the preceding year will be reviewed and analyzed by the creditors. Knowing this it is important to not make preferential payments by paying some creditors before others. This will show unfair remarks on your bankruptcy statement and may put you in bad light to your creditors.
When facing serious financial issues involving your company, it would be best to keep your personal and checking accounts elsewhere. Not because you want to hide these rather because you want to keep your personal finances and that of the company separate. The loan agreement you will be making gives the bank the exclusive right to take your funds without prior notice.
Before worse comes to worst; it will be wise to plan for an insurance coverage. Once your company reaches further into the bankruptcy code, it will make things more difficult for you to find an insurance carrier that will be willing to renew your business coverage. This insurance policy should be well extended 12 months into the future and paid accordingly so it can’t be cancelled.
Even after you declare bankruptcy, as long as you pay what dues you can you will not be cut off from the services that you have entailed upon and those that have already been paid for to begin with. So do not worry about events such as electricity cuts, being kicked out of the building, etc. Unless you have violated any contractual rules, they cannot act upon your bankruptcy statement.
Now is the best time to return some of your leased property, unless of course you are sure that you will be able to pay the dues required to keep these. Financial trouble does not always lead down the road to bankruptcy.
One of the things that the business owner must avoid is to borrow certain monetary amounts from the Company’s Pension plan, or any other insurance plan as this may put you in more debt and add to your borrowed money and dues.
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