How to avoid business bankruptcy
You only have to turn on the news to see that many businesses are struggling just to survive. Many business owners have found that it is daily battle just to keep the doors of their business open. However, the good news (if you can call it that), is that there are steps that you can take to help your business no matter how bad the financial situation currently is. It is important to understand that whatever financial decisions that you make will be unique to the needs of your business, however, you should do everything you can in order to keep your business out of bankruptcy court. Here is what you need to know about how to avoid business bankruptcy-
- Cut costs wherever you can-Whether your business is doing all right or is struggling now is the time to cut costs. You want to look closely at every expense in your business and determine if you really need to be paying that. As a basic rule if something is not directly contributing to the bottom line of your business then it should be cut. However, there should be a note of caution here. All cost cutting should be done with precision. If you fail to cut enough your business may fail anyway and if you cut too deeply you might be fatally injuring your business. Strategic and careful cost cutting will most help the finances of your business. If your business is in serious financial trouble then you should develop a short term analysis of your cash flow. This will help you see exactly what bills are the most important to pay right now. In addition, you should not hesitate to call your suppliers and see if you can renegotiate better terms with them. The bottom line is that financial problems are easier to deal with when they are small and waiting is never a good idea.
- No matter what pay your payroll taxes-The bottom line is that the IRS will not accept that you didn't have the money to pay your payroll taxes. You should do whatever it takes to pay your taxes in full and on time. Every business owner should understand that they can be held personally liable for any unpaid employee taxes. In addition, the IRS is likely to assess heavy penalties and interest if you have unpaid employee payroll taxes. You should also keep in mind that if you do end up filing for business bankruptcy that this type of debt is not discharged. Make it a practice that you always pay your payroll taxes because the problems from not paying are not something you want to deal with.
- Always provide full disclosure-If you are approaching a lender to try and take measures to improve your business finances then it is crucial that you provide full disclosure. Many business owners are tempted to hold back information that may not put them in the best light. This is never a good idea. In today's age of information your lender will very likely discover what you have held back. Do not assume that your prospective lender will automatically reject you. More importantly if you do not disclose your full financial situation and it is later discovered you could be held liable for fraud. This could not only end up ruining your business' reputation it could leave you with huge legal problems. In connection with practicing full disclosure you should never try and hide assets. Not only is this not a good idea this could also leave you facing fraud charges. Whether or not your business is in good financial shape the best policy is always full disclosure about everything you owe and everything you own.