Economic troubles have caused many small businesses in Tennessee to lose money. In many case, the debts outnumber the assets. When this happens, business owners may feel as they are sinking, with no way to stay afloat. Business bankruptcy may be on your mind, but before resorting to this, there are some things to do first. With these tips, you may be able to delay bankruptcy or avoid it altogether.
Probably the most obvious way to save money is to stop spending, but that is easier said than done. Increase your cash flow by creating a short-term budget and plan that will help you see where your money is going and where you can trim excess spending. If you have any leased property that you are not currently using, return it.
Make sure you are paying the right debts. Taxes should always be paid because you will get hit with stiff penalties if you do not. Moreover, you cannot wipe out tax debt with Chapter 11 bankruptcy. Make sure to pay all creditors equally. If you do file for bankruptcy, you will not be looked at favorably, if you have a history of paying one or two creditors over the others.
It is important to keep your business insured, but many companies will not insure a business going through bankruptcy. So, renew first, and then file for bankruptcy. Another tip: keep your business accounts separate from your personal accounts. Some banks have the liberty of taking money from one account to pay off overdrawn accounts without your approval. As such, if you do not want to lose all your personal assets as well, keep them at a different bank.
If none of these tips works, bankruptcy may very well be your next step. You may also want to consider selling your business. It may be wise to consult with bankruptcy lawyer who can advise you of the appropriate steps.
Source: FindLaw.com, "Help for Your Business During Financial Trouble," accessed on June 13, 2015