If your business finances are struggling, help is available from the Money Advice Trust’s Business Debtline debt advice service. They offer guidance that could save your company from bankruptcy.
Provides free telephone and online advice for self employed people and small businesses, and features an information section with useful facts sheets.
Your budget tool
Your budget tool is an integral component of your business and should help maximize every dollar. It tracks expenses and income, while adapting your operating plan based on needs and future growth goals.
As a first step, it’s vitally important to estimate your revenue. This estimate should be based on past performance or, in the case of startups, industry trends and averages.
Next, calculate all your expenses. This should cover everything from products and services costs to fixed expenses like employee salaries and equipment purchases.
Finally, be sure to include your profit margin. This refers to how much is left after subtracting expenses from revenue and accounting for expenses as a percentage of total profit margin.
Set aside money for unexpected costs such as repairs and emergency insurance policies. Planning ahead can protect against financial emergencies like market crashes or environmental disasters from becoming an unexpected expense.
Completing a business budget
Implementing a business budget is an integral component of any small business owner’s strategic plan, as it enables them to forecast cash flow, identify functional areas for improvement and ensure smooth business operations.
Step one in creating a budget is identifying all of your income sources and the amounts they bring in every month, such as rent, insurance premiums and raw materials purchases.
Next, it is necessary to tally both fixed expenses and variable expenses, then compare cash inflow (income) with cash outflow (expenses) to determine your overall profitability.
Finally, it’s wise to create a contingency fund to cover one-time costs that don’t fall under your variable expenses. These costs might include repairs for broken equipment or inventory that has become damaged, so having something set aside for this eventuality now will prevent it from cropping up when your business is already stretched thin.
Business partnerships
Business partnerships provide a way for individuals and companies to join forces and share resources, while also giving each partner access to unique skills, perspectives, and perspectives that could help expand their respective businesses.
Communication between partners in a partnership is of utmost importance for smooth operation and can help prevent conflicts of interests from occurring.
Be prepared to discuss potential future issues that could arise. These could include how profits will be split, how much equity each partner contributes and how debts incurred by the business will be handled.
An effective partner can also be helpful, enabling you to share in the risk associated with running your business, especially when dealing with clients, suppliers and lending institutions.
HMRC can collect debts
HMRC is an expansive organization with resources dedicated to collecting unpaid tax debt. If your taxes go unpaid, HMRC has various strategies at its disposal for collecting arrears; sending Field Force Officers and third-party collection agencies out to collect.
If you cannot pay your tax bill immediately, HMRC may accept a Time to Pay arrangement, which offers a structured monthly payment plan to allow you to settle what you owe over time.
However, it’s essential to remember that filing bankruptcy only becomes worthwhile if your business is truly struggling – otherwise HMRC may take more aggressive action and start bankruptcy proceedings against you which could force the sale of assets from your possessions.
As part of your ongoing tax liability management strategy, it’s advisable to notify HMRC at any signs of difficulty with your taxes and work to secure extra time to pay or negotiate an Administration Order with them in order to safeguard your business.
