by Lina Martinez
Most small business owners will experience debt associated with their business at some point or another. This may come as a result of investing in specialist equipment or software on credit that you need to pay back, allowing a client or customer to take stock or products through a payment plan that they haven’t yet managed to clear, or taking out a loan for business improvement and expansion. If everything goes swimmingly and according to plan, debt can generally be cleared pretty quickly. However, if you find that your business isn’t generating sufficient profits to clear debts, you may begin to find yourself in trouble. The good news is that you’re not alone when it comes to dealing with debt as a small business owner - numerous other individuals are in the same boat as you and there’s all sorts of different advice out there that can help you to get back on your feet. Additionally, according to this lawyer, you can always seek legal advice to overcome your situation. Here’s just a little information to get you started out in the right direction!
The Importance of Clearing Business Debts
We start up businesses as a means of providing ourselves with a comfortable lifestyle. The profits that our businesses generate used to put a roof over our heads, food in our stomachs, and to fuel our homes. On top of that, we hope that there will be sufficient income to provide ourselves with a few luxuries. If your business is constantly in debt, you won’t be able to benefit from any of this.
Bankruptcy
If you find that any profit your business is making is merely being channeled into clearing debts that don’t seem to be going away, you might want to consider bankruptcy as one of your debt relief options. By filing for bankruptcy, all of your existing debts will be completely cleared and you won’t have to worry about them again. You will no longer owe any money out to anyone, and you will have a fresh slate to start over. Just remember that there are financial consequences that come hand in hand with going bankrupt - you will have to sell off your assets, you may not be able to hold a bank account for a set period of time, and you are unlikely to be approved for credit from professional lenders in the future.
Consolidating Debts
If you are merely struggling with debt due to a lack of financial organisation, you might want to consider consolidating your debts. This will essentially put all of your owed money into one pot which you can pay off easily. This reduces the amount of missed or late payments that you make and consequently reduce the number of fees and fines that you are charged. Clearing your debt will become a whole lot easier without these extra expenses.
Hopefully, the above advice will help you to determine whether bankruptcy is the right option for your small business, as well as providing you with an alternative that could help you to manage your professional finances a little more effectively!