Category: Finance

Finance category of bizsieve

5 Ways to Get Your Small Business Out of Debt

Businesses typically start under a cloud of debt. Most people starting up small businesses today simply do not have capital just lying around in their personal bank accounts which leads to the need for loans or credit cards in order to get their business going. Once you begin in debt however, it can seem more than difficult to get out. If you feel that your small business is literally drowning in debt, there are a few things that you can do to pull yourself out without having to consider bankruptcy.

  1. Stop Spending – This is the most important thing that small business owners can do to eliminate debt. If you do not have to spend, then don’t. Think about what you need regarding actually running your business and eliminate all unnecessary or unwarranted costs. If you do not need new computer systems then continue to use your old systems until your finances are in a bit better shape. If you have office equipment that you are not using, consider selling it and adding a bit to your cash flow. However you do it, eliminating excess spending is critical in getting your business finances under control.
  2. Consolidate – If you have several loans or credit cards, think about putting them all together into one product. Loan consolidation can help you to lower your payments and enjoy a bit of a breather from that pile of debt. You may find that interest rates are lower if you choose a consolidation loan over credit cards and you can turn many different loan payments into just one convenient payment.
  3. Restructure Your Budget – If you are unable to pay your debts then perhaps your company is not sticking to a strict enough budget. Take some time and go through your budget, cutting out anything that is unnecessary and ensuring that you are allowing enough each month to meet your debt obligations. Ensure that you are actually making enough money to cover your fixed monthly fees such as rent and utilities. Once you have enough allotted for these costs, add an amount in for bringing down your debt a little at a time.
  4. Call Creditors – If you know that you are having difficulties in paying your creditors, call and speak with them. They may actually surprise you and offer you a lower payment plan or many may give you a settlement amount that is lower than what you actually owe. You never know unless you ask so be sure that you call and speak with your creditors to see what you can do.
  5. Get Help – If all else fails or you find that your creditors are a bit less than enthusiastic about helping you, seek the assistance of a professional debt management company. Professionals can help you to better structure your budget and ensure that you have enough set aside each month to actively begin paying down your debt. These companies are experienced and can assist you in getting your business out from under those piles of bills and operating completely debt free.

5 Tips to Better Understanding IR35 and How It Applies to You

If you provide freelance or contractor work, you may be wondering whether or not IR35 applies to you and if so, how you will be affected by it. Understanding the regulations regarding IR35 will help you to better prepare for it and ensure that you are not surprised if you receive a tax bill. Here are a few guidelines and tips that are designed to give you a better understanding of the topic.

  1. Owning more than 5 percent of a limited company in addition to having one client that contributes more than 60 percent of your turnover means that IR35 does apply to you. Note that you will also have to have a contract between that single client and your limited company and also work in a location that belongs to the client and use equipment that the client owns. This means that you are considered a disguised employee by that client.
  2. Legislation can be confusing and downright frustrating to understand. The HMRC has designed tests to determine if you are considered to be in disguised employment. You should ask yourself if you have the option of substituting yourself for another company employee or if the client actually controls when and how you work as well as the type of work that you do.
  3. If you are considered in disguised employment according to IR35 legislation then you will pay more tax. Your taxes will be paid as if you actually worked for the client in question. The income that is paid into your limited company from that specific client would also be subject for NI and tax. This makes the tax that you are required to pay much higher than the regular tax rates for limited companies with client or supplier relationships.
  4. You can prove that you are not actually in disguised employment. If you have your own business stationary and company logo and use your own equipment, this could show that you are not actually working for the client as an employee. Additionally, a company website for your limited company that is designed to bring in additional clients and ensuring that your contract is written properly can help as well. You can also prove that you are not in fact an employee if you work from a home office just as much as you work from the client’s office. You will want to secure a business telephone number even if you are using Skype or another virtual number.
  5. Understand that proving you are not in disguised employment can take money. After all, setting up a website, phone number and office space is not going to come cheap but you will be far better off in doing so as opposed to paying the higher tax imposed on you if you are deemed a disguised employee. Also understand that everything you pay in order to support your limited company is tax deductible so you will be giving back to other businesses instead of paying your money directly to HMRC. Small businesses acquire operating costs so if you can show that your company is paying for things just like other businesses, it can help you to prove your case regarding IR35 legislation.

About the Author: This article was written by Nixon Williams, offering IT contractor accountant services.

What are the steps to start Your New Business with a Clean Credit Score

Many people dream of owning their personal business. However, before you give wings to your dream, it is very important to organize your personal finances. At this stage, you will be required to put in your own personal finances to get started with your business. However, to initiate successfully, it is very important that you use a ‘professional eye’ approach towards your personal finances.

Start-up expenses can be huge but it is advisable that you use your own personal finances to carry out the initial expenses. Avoid funding these expenses on credit or else you will end up with huge credit debt. You also have the option to go for a business loan. This is a better option as compared to credit card because it is a one-time loan with usually lower interest rates as compared to credit card.

However, there is a connection between your credit card and business loan that you must understand in order to successfully apply for a business loan. The relationship is that your credit card debt must be in order before you could apply for business loan. This means that you must maintain clear credit score if you wish to win the business loan without any hassle.

If you do not possess an organized business loan history, then lenders will look up to your personal credit score to negotiate loan terms. Do not let credit score problems affect your business set-up in its initial stages.

Your credit score is indeed a very important number for your personal business career. You will need to show it off for various purposes once you are running your own business. It works as the determining factors, especially for negotiating loan application and interest rates.

Three Steps to Set-Up Your Business with Clean Credit Score

As a new business owner, you must definitely look for lower interest rates on any credit finance or loan you acquire. This will give a solid base for your business to begin.

Step 1 – Pay Your Credit Card Debt

After identifying your credit weakness, take appropriate measures to improve your standing. The basic goal you will be working for is to eliminate any credit card debt you are liable to pay. At first this may not seem to be the best idea, but it is true, paying your debt faster can actually ease down your debt payment. It will also cause it to be less expensive eliminating the additional interest you will be required to pay otherwise.

The idea is to make double payments on the minimum balance of the debt with the highest interest liability. You can manage the rest of your credit liability with lower interest rates the way you like. By paying off the debt with the highest interest rate first; you can save yourself from paying the additional amount of the extra interest for a particular debt liability.

Once the highest is paid, move on the debt liability with the next highest interest rate and so on. Eventually, this will lead you to clear out your credit card debt maintaining a healthy credit score for you.

Step 2 – Study Your Credit Report

How often do you check your credit report? You must do it often in order to ensure there are no mistakes that are reflecting any negative effects on your credit score as well as your interest rates.

In case you find a mistake, you can seek assistance from the credit-reporting agency and dispute them. Your dispute will be responded within 30 days successfully. This is indeed worth trying since you have nothing to lose in this procedure, except for bad credit score.

Step 3 – Pay Bills

The negotiation over your business loan will not solely be based on your debt liability payment. You must also show that you are responsible when it comes to your bills and debt payments. You can do this by showing a good history of your rent, car payments, or utility bills. In short, keeping all the payables and debts in place and organized will help you achieve business loan with a lower interest rate.

About the Author: The article is provided by Rosette Summer. She thinks that good finances make successful business! But in case this does not persuade you, visit Consolidated Credit’s website for debt relief advice.

4 Tips for Understanding the Difference between Insolvency and Bankruptcy

Insolvency and bankruptcy are two entirely different things although the two are often confused. Insolvency is a state in which a business no longer has the means of paying debts on time. This occurs whenever liability or debt exceeds the company’s revenue or cash flow. Once a company is deemed insolvent, immediate action must be taken in order to settle or negotiate debts. Not effectively solving insolvency can lead to bankruptcy or a liquidation of all assets. Because insolvency and bankruptcy are often confused, it is helpful to know the differences in the two.

  1. Insolvency is defined as the inability to meet current financial obligations. In other words, your company is not currently making enough money to pay your debts. This can occur at any time if your business revenue falls below what you require to keep debts paid on time. Bankruptcy is often the end result of insolvency and involves liquidating assets in order to pay debtors. In some cases and depending on the type of bankruptcy filed, the business itself may not be required to pay the debts off but will likely end up closing due to lack of assets.
  2. Creditors have the ability to invoke additional rights if a business becomes insolvent. During a bankruptcy however, creditor rights are limited. Once your company is declared bankrupt you receive a bit of protection from your creditors. In the case of insolvency however, you have no such protection and creditors are legally allowed to collect their debts using a number of different means.
  3. Companies that become insolvent actually have a way out. Bonds can be sold that will help to raise needed cash to pay debtors. Once a business enters into a bankruptcy however, this leeway is no longer an option. If you are forced to file bankruptcy on your business you will have to follow through with the bankruptcy. Becoming insolvent can be turned around by simply accumulating more cash.
  4. Companies that are insolvent may be forced to become bankrupt or go into receivership. In some cases, you may be forced to liquidate assets in order to pay debts. Once you have found yourself insolvent you have a number of decisions to make regarding the future of your business. You can choose to attempt to raise additional revenue to keep your debts paid or find ways of refinancing that debt to lower your payments and/or bring your accounts current. Bankruptcy is normally the last result for small business owners who are insolvent and cannot find a way to bring their debts current.

Businesses can recover from insolvency and many have. There are a number of ways that you can raise capital to keep your business head above water while you build up customer bases and sales. Choosing to declare bankruptcy is a decision that should be considered carefully and again, this is often the last resort for small business owners. Understanding the differences between bankruptcy and insolvency is important as is choosing a qualified and experienced attorney should you decide that bankruptcy is in the best interest of your company.

Insolvency does not always lead to bankruptcy and all businesses that are insolvent are not bankrupt. However, all businesses that do file bankruptcy are considered to be insolvent because they have exhausted all means possible of paying debts and have found no viable solution for doing so.

About the Author: This article was written by Real Business Recovery, a team of award-winning insolvency practitioners specializing in Company Voluntary Arrangements or CVA. Visit us at http://www.realbusinessrecovery.co.uk for more information.

Public Liability Insurance

There are a number of insurance types businesses are required to have and one of the latest ones is public liability insurance. This is not a legally required insurance but many businesses are finding they are missing out on business if they do not have this level of cover. Members of the general public in recent years have learned a lot about business insurance and as such are looking for proof of public liability insurance before they will hire trades people to complete work for them.

Public liability insurance, in its simplest terms, covers businesses against claims of damages and injury. Whether a customer’s property is damaged on the business premises or within the customer’s own home, or the customer themself is injured, the business will be covered against any claim put forward.

As with all insurance there are a number of aspects to look out for when buying public liability insurance. When looking at any policy it is important to keep a number of questions in mind: these include ‘what is included in the policy’ – does it cover every aspect of your business and the situations you work in? It is also important to check that the level of cover is enough for your business: if you do not take out the right level of cover you may find yourself having to pay out against claims that the policy does not cover.

Another important question to consider when looking for public liability insurance is if you can change your level of cover depending upon your needs. There is no point taking out a policy which won’t allow you to increase the level of cover as your business grows. Similarly, if your work is mainly seasonal you won’t want to be paying large amounts out on months where you aren’t getting much work in – look for a policy which can be flexible around your business needs.