Guest Blog submitted by Virginia Cooper
Business debt can stem from a bad economy, a major emergency, or poor planning. While you may feel like your debt may easily put your business under, this isn't always the case. It's possible to overcome these financial hardships. When you know how to proceed, Audientum explains that there's still potential for your business to be a success despite the current debt.
Form the Right Business Type
Choose the right structure for your business to take advantage of potential tax breaks and shield yourself from personal liability for your company's loans and debts. If you're doing business or planning to do business in the United States, consider forming a limited liability company to reap those benefits as well. Fortunately, you may establish an LLC online with little hassle, and you don't need to hire an attorney for the process when you opt for an online formation program. Provinces and states have various rules for business entity formation, so do your research ahead of time.
If you're not hiring a professional to complete your taxes, brush up on your tax knowledge to find other legal loopholes to reduce how much you pay.
Improve Your Accounting Skills
Help your business get out of debt by improving your accounting skills. For example, check and double-check your cash balances each day. As a general rule, deposit or transfer profits every day to a designated account. Be sure to also stay on top of invoicing, and make a point to run invoices at least twice a month. To make this process easier, an online invoice generator can help you quickly create custom invoices that fit your business, and that you can easily send out as PDFs in minutes. By being on top of your finances, you can reduce wasted money and have more cash to put toward your debt.
Negotiate Better Terms
Business News Daily suggests negotiating better loan agreement terms to lower your interest. Compare vendors. If you find one that offers better terms, let your current vendor know, and ask them to match the other deal.
Before you go into any negotiation, rehearse your course of action. When you do this, you enter the bargaining with more confidence.
Fortunately, the U.S. Chamber of Commerce points out, the government and various private organizations and individuals provide grants for small businesses. This financial assistance doesn't need to be paid back.
While grants sound beneficial, many companies apply for them, so you have a great deal of competition. Therefore, your application needs to stand out. For instance, you must create a strong business plan that outlines your business's objectives, its projected growth, and other vital information about your company.
Read the grant information carefully because some grants are for expansion purposes only, while others are industry-specific.
Ask Friends or Family for Help
You don't want to add to your debt by taking out a business loan, but you can ask your friends or family members for financial assistance during this time. Instead of owing a lender charging potentially high interest, you owe money to someone close to you. The terms may be less stringent, and you might not owe as much interest. Plus, in addition to repaying the principal, you can offer your friend or family member stakes in your business instead of paying them interest.
Better Financial Health for Your Business Can Be Obtainable
Getting your company out of debt is often a multi-step process. To turn your business around, you may need to ask friends or family for help, change your business structure, apply for grants, and manage your cash flow more carefully.