Tax Attorneys for Small Businesses: Benefits & StrategiesQuBY2E | March 1, 2023 | 1 | Blog
As a business owner, your primary focus is likely on expanding your company. But with growth often come new financial and legal challenges, especially when it comes to taxes. The last thing you want is to end up on the wrong side of the Internal Revenue Service (IRS). That’s why it’s essential to have a professional who can help ensure your business receives all the tax benefits it’s entitled to. In this article, we’ll explore some key strategies for navigating complex business finances, so you can avoid pitfalls and stay on top of your game.
Surviving Financial Distress: Tips for Business Owners to Avoid Bankruptcy
Many business owners in today’s economy desperately need assistance as they try to navigate their way out of a deep financial hole. Some of the best ways that you can follow are:
Timely Tax Payments
Taxes should be paid on time at all times. When paying employees, payroll taxes must be deducted and remitted promptly. The revenue service and your tax authorities can and will most likely penalize you for failing to pay these taxes. In addition, filing for bankruptcy is not a guaranteed strategy to eliminate this type of debt.
Prioritize Essential Payments
Need help making ends meet? Reduce your outlays. If you’ve reached the point where you know you won’t have enough money to cover your expenses, drastically reducing them is the only option. Saving money is an excellent assistance to businesses since it allows them to focus on more important tasks. In order to ensure the smooth operation of your business in the near future, you should keep a record of all outstanding payments owed to you. Finally, keep paying your essential payments while negotiating payment terms with your suppliers and creditors.
Avoid Fraudulent Loan Applications
Don’t hide your financial obligations. Amid a severe financial crisis, anyone will be tempted to visit a bank and request a new loan while providing the bank with fake information. Please resist this urge. If a creditor extends credit to you after you’ve provided false information, that loan is considered fraudulent, and you may be held personally responsible for repaying the money.
Asset Transfer Risks
You can’t save your company’s assets by transferring them to another company. In an effort to avoid paying their debts, many business owners may transfer company assets to close family and friends. But many debtors’ attorneys have experience following up on such deals to regain their assets. Furthermore, you could face civil or criminal fraud penalties if the law finds out.
Debt Payment Bias: The Perils of Favoring Certain Creditors
Paying down some debts while leaving others unpaid is a bad idea. If you have a pattern of favoring certain creditors over others while making debt payments, you should expect to face harsh consequences under bankruptcy law. In the event of a bankruptcy filing, the court will review all payments made to creditors during the previous year to determine whether or not the company provided any creditors preferential treatment. In the absence of a bankruptcy filing, you have the legal right to prioritize the payment of any unsecured debts you have before those of secured debts.
Always maintain a debt-free financial life. Your checking and savings accounts should be kept elsewhere if you have a loan from a bank. The term “setoff” refers to a provision in many loan agreements that allows the lender to withdraw funds from the borrower’s account immediately and without warning. The last problem you need is a lack of funds combined with the unpleasant discovery that your bank has drained your account overnight.
Most insurance providers will not cover a company involved in a lawsuit. As this is the case, you should consider renewing your insurance policy before filing for bankruptcy. Your insurance policy will not be canceled if you keep making your premium payments on schedule.
All About Rents, Utilities, Leased Assets, Pension Plans & Bankruptcy
No worries about rent or utilities! To be more precise, utility companies and landlords are exempt from bankruptcy protections. If your company declares bankruptcy, the utility provider will not cut off your power; instead, they may ask for a deposit. Even if your commercial lease includes a provision that gives the landlord the right to evict if your firm files for bankruptcy, in most cases, the landlord will not be able to do so if you keep paying rent throughout the bankruptcy procedures. Courts have ruled that these provisions are void unless the occupant is an assignee or sublessee.
Return leased items you no longer want. It is common practice for firms to lease office space to conduct their day-to-day operations. If your company currently makes use of such assets, it would be wise to assess whether or not they are essential to its survival. You should think about giving back leased items that aren’t necessary. A bankruptcy discharge may be obtained if the value of the returned property exceeds the amount still owed on the lease. If you want to keep the machinery, you’ll have to keep making payments once the bankruptcy is through.
In many pension systems, you will need help accessing your own money. Some pension plans let you take money out but do so with a heavy penalty. It is also possible to terminate the plan, resulting in the whole distribution of the plan’s assets, eliminating all deductions, and imposing all applicable taxes and penalties. You should think long and hard before going this route because there are penalties and taxes to pay if you can’t finance the plan.
Get out of the business market. In other words, this is the last option. If you’ve exhausted all other options and don’t think bankruptcy will help, selling your company could be the only way to stay afloat financially.
As a business owner, it’s essential to have a plan in place to navigate the complex world of finances and taxes. Timely tax payments, prioritizing essential payments, avoiding fraudulent loan applications, and asset transfer risks are key strategies for avoiding bankruptcy. In addition, it’s crucial to maintain a debt-free financial life, renew insurance policies, and understand the implications of rent, utilities, leased assets, and pension plans when it comes to bankruptcy. By following these tips and seeking the advice of professionals, you can avoid potential pitfalls and ensure that your business continues to thrive. Remember, being proactive is always better than reactive when it comes to finances, so start planning today. Have a glance at the MSME blog (https://www.msmeblog.com/) for better ideas and updates. Consider hiring a tax lawyer because staying on top of the ever-evolving rules and regulations may be a thorough job in and of itself. You may feel easy knowing that a tax attorney is handling your firm because they have received considerable training in tax law.