Reducing or Eliminating Your Business Debt
Guest Post by Chelsea Lamb
Did you know that about 70% of small businesses have outstanding debt? This means if you’re struggling with debt at the moment, you’re not alone. However, you must create goals and take actionable steps to get your business out of the red. Today, Solomon Bruce Consulting is here to guide you through this often-challenging process.
Consolidate Your Debt
You should identify your debt first. If you’re struggling to make payments to multiple sources or are being swallowed alive in interest, consider consolidating your debt. You then have just one creditor to pay and the interest rate may be lower.
Consider Hiring a Business Debt Expert
If you’re in over your head, think about hiring a professional. Although this sounds like additional debt, it may be a cost that helps save your business.
A business debt attorney can address nonpaying clients. A lawyer is particularly beneficial if you have clients who owe more than $5,000 or one of your nonpaying clients is a large corporation. It may not be in your best interest financially to address clients who owe little or are individuals or small businesses.
An attorney may have other ideas to help you get out of debt, too.
Reevaluate Your Budget
Your business’ budget needs to change as your current needs change. For instance, if your business’ debt has increased, but the income has remained static, consider reassessing your budget and making changes, even if these changes are only temporary.
As you create a budget, know how much your company brings in each month. Then, get an idea of the amount of your regular debt by calculating any recurring bills. Remember to add any money you owe creditors when you reconsolidate. As you’re calculating this figure, take steps to reduce your debt. Is there any unnecessary debt? Can you save money by asking your vendors for deals or shopping around for new vendors?
Save Money on Your Taxes
On average, a small business owner pays 19.8% of their total yearly income on taxes. This can be quite a hit, especially if you’re already struggling financially. One way to possibly reduce the tax burden is to hire a professional to prepare your taxes. They may find loopholes or other ways to save your company money on taxes.
Also consider forming a limited liability company since that business structure offers tax advantages. Further your savings by filing the paperwork yourself or using a formation service. Both options are more economical than hiring a lawyer to handle this process. Each state has its own regulations surrounding LLC formation, so check your state’s rules before you proceed.
Improve Your Business Skills
Sharpen your business skills, so you can expand your business and manage it more optimally. Going back to school for an accounting degree, for instance, allows you to improve your marketing, finance, and business ethics knowledge.
Better Your Invoicing Process
To get paid on time, improve the efficiency of your invoicing process. You can create personalized invoices with an invoice maker from pre-fabricated templates that will make record-keeping much easier, as well. You can even include your logo and text to make it specific for your business. Don’t forget to choose an option that creates invoices in a format that’s compatible with your programs.
Improve Your Business’ Financial Health
Even if you have debt, you can take steps to improve the financial health of your business today. Just remember that making a plan only works if you stick to it. Likewise, don’t get discouraged or lose sight of your business’s truth worth, and bright futures are guaranteed!
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