Today’s credit market has become a water-tight financial area where there is no room for delinquency, even for a penny. Creditors take to arms if they find a single default in the monthly payments and go all out to seize every last cent these borrowers may have. As a result, entrepreneurs both big and small are struggling to make monthly loan payments for their start-ups while simultaneously keeping their business above water so that they don’t have to declare bankruptcy.
This is the time for entrepreneurs to begin revisiting their business strategy and customize their daily activities to suit their requirements in order to stay afloat financially. Entrepreneurs should be at the forefront of these developments and lead others to the right direction by actively engaging in the following six things:
A. Save all receipts – Sometimes entrepreneurs have enough money in their business budget to be able to make a few charitable donations throughout the year. Many of these donations may also be considered for tax deductions. It is very important for the donors to collect these receipts in order to get rewarded by the IRS for being generous. A few examples of investments that are granted itemized deductions include medical care costs, state taxes, local municipal taxes, and business related costs among others. By saving these receipts, this will help business owners to lower their payable tax amount more than what they could have got due to standard deduction. Through these activities entrepreneurs can save money and make debt payments.
B. Modify the business budget – One of the primary signs of incurring debt and falling back on payments is the failure of the business budget which is unable to contain the debt from going out of hand. The top priority for entrepreneurs would be to modify the existing budget and get rid of all the bad virtues it has, as per the current fiscal scenario. The new budget should be able to define the cost of equipment, rentals, and productions so that both the fixed as well as variable costs are under control. Entrepreneurs with credit card debt should pay more than the minimum amount so that they don’t end up paying more than the actual sum owed to the creditors due to a prolonged repayment period.
C. Prioritize debt payments – Business loans carry a high rate of interest that wreaks havoc on the coffers of the company, especially for start-ups. Prioritizing debt payments will gradually free up a good amount of cash that can be clubbed with the existing payment amount to clear off the remaining ones faster. Loans which carry heavy fines for delinquency should be paid off first.
D. Hire tax planners –The help and support of tax planners to lend assistance in planning the annual tax returns for entrepreneurs is incredibly valuable to the survival of a business in debt. Licensed CPAs can additionally provide suggestions on how to get tax deductions from the IRS which will protect the dwindling finances of cash-strapped businesses and prevent them from going bankrupt.
E. Approach debt experts – One of the last options that people have to choose is to approach debt experts or credit counseling agents. These people are qualified enough to advise debtors and offer them apt solutions in order to get out of all kinds of debt. There are several programs like debt settlement, debt consolidation or debt management that can provide debt relief to the debtors and prevent bankruptcy which are run by these debt experts.
On a final note, be sure that the programs have been approved by the Federal Trade Commission and that the debt relief agencies have a Better Business Bureau rating and all the other necessary licenses or registrations to operate in the country.
Author’s Bio: Alden Brooks is the Community Member of Oak View Law Group (OVLG) and has been contributing his suggestions to the Community since 2009. He has also made notable contributions through the various articles written on different subjects related to the debt, credit consolidation, bankruptcy, and more.