Even casual observers have some knowledge that Canada has a debt problem that it needs to deal with, considering it is at a high risk of a full-blown debt crisis. As per the Bank of Canada, the average Canadian owes an approximate 1.7 dollar for every (post taxation) dollar they earn. This issue is rampant amongst almost all of Canadian society. But, as it is usually the case, the middle-class households, the startups, and the small businesses find themselves in the thick of an ever-increasing debt.
Our post focuses on the startups and small businesses who have been welcomed into the free market in the midst of a brewing debt crisis. The role of the startups and small businesses must never be undermined, the ones who run them assume tremendous risk, borrow tremendous sums of money, and are, in some cases, directly responsible for several employees that find their livelihood from an anticipated profit. So, we ex-CRA accountants and tax shelter accountants intend to provide you with the essential credit repair tips that ensure your enterprise succeeds in the face of all the debt, despite the economic environment we find ourselves in.
Before we proceed to deal with your debt problem, we believe it’s worthwhile to tell you a thing or two about what the government does for you. For instance, rather than approaching a private bank or entity to finance your business, you can explore government financing programs to understand its benefits. You can also learn about other government grants and contributions that might be more cost-effective in the long-run. Furthermore, have you approached tax specialists to understand the tax credits you’re legally entitled to? There’s a possibility that you’re grappling with sizeable debt only because you haven’t claimed these deductible expenses in the first place. The government also wants you to manage your finances better. You can take advantage of tips pertaining to your planning and budgeting process.
The mere fact that your debt is at a constant upward-spiral is an indication that your budgeting isn’t adequate. Your budget, now, must be in strict accordance with your current financial position. While a standard budget contains all the fixed and variable expenses that you face on a regular basis, you must also allot a significant sum of your revenue for the gradual, consistent repayment of debt. Approach a reputed accounting firm to understand and categorize the nature of your expenses to see if any of these expenses can be trimmed. An accounting firm can also help you determine the debt that must be repaid instantaneously based on the interest rates and the nature of your creditors.
It is important for a startup to accumulate capital from various sources. Every time, this accumulation of cash means borrowing large sums of money. You need to prioritize the repayment of debt to achieve equivalence. You need to go about the repayment of a debt in a strategic way based on what is at stake. Did you personally guarantee the repayment of a sum to a creditor? Are your personal assets at stake if you should fail to do so? Then, it is imperative to clear all debt of such nature. The same also applies to all high-interest debts you owe to private banks or private creditors. Before you think of any business expansion or any large purchase, even if it may be for the sake of your business, it’s important to understand the repayment of debt must always get the front seat.
Your creditors ought to know if they are unlikely to receive their payment on time. If this delay of payment is a result of a terrible financial position you’re currently in, there’s little point keeping your creditors in dark about it. Your creditor might just end up reevaluating the initial terms of payment and offer a hardship plan or better payment terms. In other cases, creditors are also known to accept part-payment in one go and the other half can follow in a short duration from there on. However, as a debtor, you must always bear in mind that defaulting on revisited payment terms is problematic on multiple levels. Perhaps, you can consult with tax specialists to approach your creditors to reevaluate your payment scheme.
While our primary objective is to ensure you rid yourself of all debt, we must do more to ensure this doesn’t happen again. After all, we tax specialists believe in educating our clients and providing solutions. Now, we believe it’s imperative that you identify the practices that managed to drag your startup into such debt in the first place but you also need to identify areas where your business can manage to cut expenses. Furthermore, you need to make sure that you have a swift cash recovery system in place to ensure that your customers pay their dues from time-to-time and you don’t have to rely on excessive borrowing. Your final objective is to ensure that you manage a reserve fund that you can lean on when business runs dry. It’s better than rely on creditors.
Lastly, you can always opt to rely on an accounting firm to handle your finances. You can be certain about one thing when you enlist the help of an accounting firm such as ours –is that you won’t be facing any problems with tax audits alone, as well as having the confidence that we will make use of every possible deductible that your startup is entitled to. After all, if individuals such as yourselves are discouraged from venturing into the unknown, countless others would lose a means to achieve a livelihood and the whole system would eventually enter a state of turmoil. Contact us to help us help you.
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