Knowing your financial derivatives to pay off business debts

Steve PB

When your business organization or company has been hammered by debts for a long period of time, you will find lenders coming for you from all corners. They can also threaten to sue your business or you. They way you set up your organization and whether that guarantees any debts or repayments, these factors dictate the amount your creditors can take from you. Additionally, you need to think whether you will be eligible for filing a bankruptcy claim. The claim can change the amount but it does have its fair share of pitfalls. You need to evaluate your financial condition, paying potential and confirm the exact debt amount you’re paying.

The bankruptcy claim process

It’s wise to consider a bankruptcy claim only and when your business is immersed in debt and faces total extinction. There may be creditors attacking your from all fronts. You need to conduct a lot of evaluation before filing for bankruptcy. However, the claim could give you all the leverage and time needed to sort out everything. It’s actually dicey pathway but if you can manage it wisely and effectively, it can sure bear good results. There’s however no guarantee what property or collateral you can keep after this claim save a few exceptions. You need to prepare yourself for this.

The tax role-play

Taxes that are labeled on your payroll are vital. Unlike the aforementioned case, internal revenue service or IRS entails no stakes in the manner in which you organize your company. They hold every business owner personally accountable for each unpaid or pending payroll taxes. Knowing the rudiments of general partnerships or sole proprietorship form of business is also crucial. The way the latter works, you and the organization becomes the same fold or entity. It means that it’s your liability to pay your business debts. For partnership, all partners have the responsibility of repaying the debt.

On claim options

Due to the sole proprietorship modality, you can find the option of either entailing chapter 13 or 7 of the bankruptcy law. Mostly viable in the UK, you need to meet certain requirements for filing your claim. You can use many options to satisfy or eradicate your personal and business debts. Now, for general partners, company shareholders or a limited liability firm or LLC owner, if you have waived the limited liability by affirming the loan amount for the firm personally, no bankruptcy proceeding will be able to shield you. You can protect your assets in this situation by filing for personal bankruptcy. You can click here to know more about the details.

The resultant benefits

One of the primary advantages that come from a bankruptcy filing is time. You get the time and good bandwidth to arrange finances. Once you’ve filed your claim, the concerned court puts an immediate stay order on each debt collections, which means that no creditor can repossess or foreclose on your property. Besides, bankruptcy can also eliminate unsecured debt. You need to take expert guidance to know the intricacies of both chapters before filing one.

 

 

 

Eradicating business debt with a compact and proper approach

Photo credit: Pexels

Eliminating your business debt is much akin to getting out of personal debt. Here, the only difference lies with the one responsible for paying the debt. It can be you or the concerned business organization. If you’re the owner of a company, however, regardless of that type of debt you face, you’d still be the one who needs to take charge of the situation and do something to eradicate this business debt. Keeping a plan at hand and a commitment to eliminate the debt, you can soon make your business debt-free. The first thing begins with the creation of a realistic budget. Many think that they can handle all the expenses and business debts. You need to put them in writing to ensure you have a vivid view of the debt amount.

Curbing interest rates

You need to ask your card insurer to do this job. The national median credit card yearly percentage rate fell to 14.96% last year. While rates continue to fall at historical lows, some would still consider paying virtually 15% interest on the exorbitant loan. Ideally, debt-ridden business owners must pay off their credit card balance each month to avoid interest charges. However, many businesses have spiraling credit card debt. Your focus should be on paying down increased interest credit card debt. Considering a balance transfer is an ideal solution in this regard. The idea here is to consolidate the debt under one credit card with a reduced rate. Balance transfer entails fees associated with. Hence, you need to do your math for ensuring that there’s offsetting of fees from the lower finance level.

The maximization terms

You need to renegotiate all conditions and terms with your vendors or prospective ones. Proper management of all payable accounts can significantly enhance cash flow and bolster your ability to repay debt. Many vendors and suppliers do offer payment terms like 15, 30, 45 and 60 days after the delivery of services and goods. Conversely, you may also be able to pitch in for negotiating an early rebate in payment. These early payment rebates could be anywhere between 2%-10%. Finally, on a periodical basis, you can shop for prospective, new suppliers that can offer a better pricing. These are smart ways to accelerate your cash flow

Enhancing the inventory

Optimizing the inventory turnover is a pivotal part of the job you’ve at hand. If your business is in debt, neck deep or a little, access or stagnant inventory can exhaust your cash reserves. You need to monitor your inventory closely and purchase it well within time for any anticipated demand. You can work with vendors and suppliers if possible and look if that can provide consignment inventory, stock or proper rights of sale and return for any unsold item. You can get a better understanding of this subject if you click here.

Loan consolidation option

Debt consolidation is one of the quickest ways of lowering your interest rates and repaying your debt fast. Instead of going for different loans with differing interest rates, you can just consolidate them into one low-interest loan. Eventually, the decisions you take today are going to impact both your business and personal finances.

Budget Basics: Costs To Consider When Launching An Online Business

Planning a budget for a company that doesn’t exist yet is always difficult. However, you need to understand all the costs involved ahead of time. Only then can you work out how much investment you’ll need to get the operation off the ground. Today, we’re going to focus on people who plan to launch an online business. We’ll do our best to leave no stone unturned and offer lots of advice. There are always techniques you can use to reduce your expenses. Even so, there are some you simply can’t avoid So, pay attention to the information on this page and ensure you adjust your budget accordingly.

photo: Informedmag

Payment processing fees

Firstly, there is no getting away from the fact that you will encounter payment processing fees. That is because you will have to use merchant services as part of your online store. The cost of a merchant service account can vary depending on the provider that you select. With that in mind, it makes sense to perform a lot of research to ensure you get the best deals. That said, some specialist comparison websites could make your life easier. Just ensure you find the lowest rates, and the fees shouldn’t affect your profits too much. In some instances, companies charge less than 1% per transaction. If you end up paying more than that, just adjust your prices.

 

photo: MedithIT

Website hosting and running costs

Hosting and other running costs shouldn’t break the bank. However, lots of business owners feel shocked when they’re slapped with an invoice from their web designers. For that reason, it’s vital that you discuss all the costs involved in advance. If you don’t do that, some web specialists will try to take advantage. We heard about one company that was charged $3,000 for hosting every twelve months. Their website was small, and they were obviously getting ripped off. Make sure that doesn’t happen to you by asking for everything in black and white. Always sign contracts so the other party can’t add extra fees.

photo: TopRank Marketing

Online marketing to drive traffic

You will have to invest a lot of cash in online marketing if you want your new business to succeed. You could have the best products in the world, but you’ll never make a dime if people don’t know you exist. With that in mind, you should begin with social media and then branch out. Banner advertising tools like Google Adwords could help you to drive a lot of traffic. So, make sure you learn how to use them as soon as possible. Of course, you could pay professional marketers to manage your campaigns. However, they are going to charge a premium, and that means you spend even more.

Now you know some of the budget basics for starting an online company, we hope you get things right. If you understand how much it’s going to cost to get things off the ground, you’ll know the level of investment you need to seek. Don’t get us wrong; it’s much cheaper than launch a business in the real world. However, you still need to grasp all the costs if you want to succeed.

Here’s How You Can Track Expenses Effectively and Avoid Going Overdraft

If you are struggling with managing your finances so as to avoid getting into debt, you are not alone. Being in your bank account overdraft can be helpful when you really need the facility, especially for short-term borrowing or in cases of emergency as a last resort. However, you can run into problems when you start relying too much on it. Going over your limit does not simply mean you have to repay what you owe, it also means that there are extra charges that are incurred. Effectively tracking your expenses can help you keep your finances in check so that you do not go overdraft. Here’s how:

  • Keep Track of Your Spending

A sure way of effectively keeping track of your spending, is by itemizing your spending from time to time, and identifying areas where you can reduce expenses. If you find areas where you spent needlessly, like a gym membership you do not use, monthly subscription for magazines that you do not read and so on, it is advisable to cut them off.

Take a look at your card payments, withdrawals and so on. What was the money used for and where do the expenses leave your account balance? Understanding your overdraft is another way to keep track of your spending. You have to constantly know the state of your bank account so that you know when you are approaching your limit. Although you do not have much of a problem when you have access to authorized overdraft where there is an agreed borrowing limit, it is even worse if the overdraft is unauthorized, and no prior agreement has been made between you and your bank. Even so, it is always safer to manage your spending in such a way that you do not need this credit option in the first place.

  • Monitor Your Budget

It is easy to go over your carefully drawn out budget if you do not consciously monitor it. You need to be sure that you can afford the expenses you have listed.

When you spend within a budget, you are better able to reduce the possibility of spending without first thinking about it, so that you do not spend spontaneously. Although it takes a lot of discipline, consistency with monitoring your budget helps you save more, helps you know where your money is going and keeps you debt-free.

  • Make Use of Apps to Manage Your Money

There are a number of online tools and applications that can help you with getting your personal finance management right. A major challenge for many people with effectively tracking personal expenses is that they sometimes have to manage different bank accounts and pay different bills. Keeping up can be challenging. Thankfully, there are personal finance and management apps that help.

Selling your car? Here’s three reasons why leasing could be better for you financially

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If you’ve reached the end of your tether with your current car, and you feel it’s time to upgrade to a fresher model, you don’t have to save for months on end to reach that point – you could go out and get a new car right now. How? More and more people are reaping the rewards of leasing a new car. If this all sounds like news to you though, then read on for our top three reasons why it could save you money in the long term.

  1. Depreciation is reflected in the price

The biggest benefit to leasing over buying has to be the depreciation factor. Simply put, as soon as you buy a car, its value begins to drop. With some vehicles it’s more than others, but in a lot of cases, it makes far more financial sense to lease, because the monthly instalments you make decrease as a reflection of the drop in value. Were you to buy the car on finance though, the amount you pay would remain the same.

If you’ve found a car that you love, it’s well worth doing a check online for the depreciation of the vehicle first to see which option would be better for your wallet. For example, Which? recently conducted a study on several specific models, and found that, while a Volkswagon Scirocco was worth 63% of its original price after three years, a new Ford Mondeo was worth just 36%.

  1. How many miles do you drive?

If you’re looking to lease a car, it is also important to consider how much you drive. For example, if you’ve worked all of your life and commuted, but now you’ve reached retirement and are using the car for personal use only, then leasing is a fantastic option. You may not need a car all the time, so having the ability to lease one for a month or so when you travel to stay with friends or relatives can be hugely convenient.

Most lease agreements can also restrict the number of miles you do, in so much as they will charge you for any extra accrued. So, if you’re driving far less than you used to, leasing is a more financially stable option; you can negotiate the number of miles driven per month, meaning far less costly monthly instalments when compared to loan payments.

  1. It can be claimed as a tax deduction

There are even more benefits if you are an entrepreneur. As a business owner, it’s worth noting that lease instalments can be registered as a tax deduction. Plus, some people may be worried that they will be refused a lease due to a bad credit rating, given the financial checks involved. However, it’s actually easier to get a lease on a new car than it is to get one on finance, so again, it’s far more convenient.

Do you know any other reasons why leasing could help your finances?

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