There’s a bunch of “business” I need to communicate today, before I get to my discussion of your business debt.
That’s because the personal filing deadline is Tuesday, April 17th, and the majority of our business clients also have us handle their personal returns. So, with that in mind, a few things you should ALSO note about April 17th…
1) Estimated taxes for the first quarter are due.
2) Want to open or contribute to an IRA or Roth IRA for 2017? Gotta get that done by Tuesday the 17th.
3) It is the final day to max out contributions for your 2017 HSA (Health Savings Account).
4) Claim any refund money from an unfiled 2014 return. (There is over $1BN of unclaimed refund money out there for that year — but only available if you didn’t file a return for that year.)
5) Most states’ personal income tax deadlines also fall on the 17th. (Exceptions – DE 4/30; HI 4/20; IA 5/1; LA 5/15; VA 5/1; any state with no income tax.)
(Oh, and by the way, if you have finished your process with us, please let us know what you thought. We really appreciate it. You can also find us on Yelp and/or Google Maps.)
Now, let’s talk debt… because I hate seeing, when I sit down with a business owner, that they got in over their head with financing. Unfortunately, it’s sometimes too late when I do — and the potential solutions end up being moot.
It’s true, I have helped execute some near-miraculous rescues from bad business debt situations that seemed impossible for clients in the past, but sometimes it’s just too late when I have the opportunity to help.
So, I’ve put together a short primer on the subject, in hopes that I might be an effective resource for you in more ways than one.
How To Eliminate Bad Business Debt In Your Small-To-Mid Sized Business
“He knows not his own strength that hath not met adversity.” -Cesare Pavese
It’s true: many growing companies need to take on some amount of debt to fund growth.
But debt at exorbitant interest rates is obviously “the wrong kind” of debt. And choosing the wrong kind of debt for your business (or having too much debt) can be a killer to your business’ lifespan and success.
So, what is the “wrong” kind of debt to amass in business?
The following would make the list:
* Credit card debt
* Car-dealership vehicle loans/leases
* Personal loans at high rates (including “debt aggregation” services)
* A high mortgage balance
But in reality, bad business debt should be thought of as any debt that is either not necessary — or which could be refinanced at terms which are more favorable.
To remove bad business debt from your business, you must plan to systematically review every outstanding loan … and try to find a way to either pay it off (without compromising growth, of course), or refinance it at a lower rate.
It will take time to organize your debts and search for alternative options that are more attractive for your business, but it will pay off in the long run.
If you have expensive debt (such as credit card balances), you should work to determine what other financing options are available to your business. If your company is profitable — or is showing strong signs of coming profitability — it’s likely that lenders will work with you to refinance at a lower rate.
And a tip: don’t think of this as a “favor” they are doing for you.
Rather, think of it as good business for the lender. These financial companies are in business to make money from loans. If you bring a good credit history and a viable business record to them, they’ll seriously consider lending you money at better terms and getting you out of the unnecessarily high payments you’re making.
Doing so will make your company all the more profitable.
Feel very free to forward this article to a business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for families and business owners. And we always make room for referrals from trusted sources like you.
Pierre-Louis & Associates CPA, P.C.