Steps to help your business avoid bankruptcy

Many businesses today, are struggling just to keep the doors open. Business owners are overwhelmed by the demands of running their business, in a difficult economy. However, it is important to know that if your business, is facing financial difficulties, there are steps you can take to try to stay out of bankruptcy court. It is important to keep in mind, however, that they may help temporarily, or they may help permanently, depending on how far down the road you are toward financial collapse. Here are some steps to help your business avoid bankruptcy-

• Cut Your Expenses Carefully-The first step is to slow your cash flow problems, if you have realized you do not have enough money coming in, to pay the bills. One way to do that is to cut your expenses as much as possible. However, it should be noted that you must make cuts carefully and thoughtfully. If you cut the wrong things, or not enough it could literally bring about the end of your business. You should develop a short-term cash flow analysis. You will need to decide what bills you have to pay now, such as taxes and overhead. You should pay those (so you can stay in business), and then negotiate other expenses with your suppliers and other creditors. You will want to try to get them to extend your terms, until your financial situation is under control. They will most likely try to work with you, as they would rather be paid than caught up in bankruptcy court.
• Always Pay Your Payroll Taxes-Financial experts advise that it is particularly important to pay your payroll taxes, in full and on time. Keep in mind that even if your business is a partnership or a corporation, the Internal Revenue Service (IRS), can hold you personally liable, for the taxes withheld from your employees' paychecks. Realize that they can, and will assess penalties, on any unpaid payroll taxes. And finally, if you end up taking business bankruptcy, this particular debt will not be discharged.
• Scrutinize Your Bank Accounts-It is crucial to realize that if you owe money to a bank, and have your bank account at the same bank, the bank can raid your bank account to pay your bill. Because of this you might want to consider using more than one bank, for your financial affairs, which is a typical business practice. You may want to have two business accounts, including one at the bank where you have your loans. However, that bank may insist on an account there to serve as a compensating balance. You may want to keep your money, (other than the amount required for the compensating balance), at another bank.
• Always Fully Disclose Your Financial Situation-If you try to borrow money to consolidate your debts, or for another reason, you should fully disclose your financial situation, to your lending institution. Realize that if you don't opt for full disclosure, you could later be accused of fraud. The legal problems that will be brought on by this can be enormous. Remember that "honesty really is the best policy."
• Never Try to Hide Your Assets-Sometimes; if a business owner fears bankruptcy, they will try to hide their personal assets by giving them to family or friends. Again, don't do this, because if you end up in bankruptcy court, these assets will be discovered, and you could be accused and convicted of fraud. The purpose of bankruptcy court is to try to protect some of your assets from creditors, so you need to trust it to do its job.