If you are the owner of a struggling small business, don’t give up hope. The stress can be overwhelming. There are steps you can take to save your business. But, you need to be smart about it. Here are a few tips from our experience over the last 30 years to get you started.
1. Cut your expenses
This may seem obvious, but it must be done wisely. Do a short-term cash flow analysis. Decide what bills you have to pay now, such as taxes and overhead, and negotiate other expenses with your suppliers and other creditors.
2. Examine your bank accounts
Consider using more than one bank for your financial affairs, which is a typical business practice. 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.
3. Don’t Hide Your Assets
If you end up in bankruptcy court, these assets will be discovered and you could be accused and convicted of fraud. Do not try to evade creditors by transferring assets to friends or family.
4. Pay your taxes
It is vitally important to pay your payroll taxes in full and on time. The Internal Revenue Service (IRS) can hold you personally liable for the taxes withheld from your employees’ paychecks, even if your businesses is a partnership or corporation. Penalties will be assessed on any unpaid payroll taxes. This type of debt will not be discharged in bankruptcy.
5. Work with a competent lawyer & fully disclose your financial situation
If you or your small business are dealing with unmanageable debt or other problems that threaten its continuation, there are a variety of options, including bankruptcy, that might be a viable solution to getting rid of debt and saving your business. Small businesses face a broader set of considerations that must be weighted carefully before filing for bankruptcy. The best solution depends on how your business is structured, the amount of assets and debts it has, your specific goals and a host of other factors. In some cases, you may be able to continue running your business while paying off debts through a repayment plan. There are a variety of bankruptcy and non-bankruptcy options that should be considered.
If you are in serious debt and at risk of losing your business, contact a lawyer ASAP. The sooner you deal with the situation, the more options you have.
Cossitt Law can help you untangle your most complex debt issues while protecting your best interests. Remember, the longer you wait to deal with a failing business, the fewer options you have.
Serious financial distress is a form of cancer. The sooner you get competent objective diagnosis and a sound treatment plan, the better likelihood of a good outcome.
Contact us at (406) 752-5616 to discuss your options and schedule an initial consultation. We can take a look at your situation and provide expert legal guidance based on four decades of small business bankruptcy experience.