When you are committing your time, energy and money to a company that is struggling, it is incredibly stressful. Understandably, tired and overwhelmed small business owners can easily give in to the temptation to shy-away from professional help, instead applying ‘band-aid’ solutions. However, these temporary fixes can be detrimental to a business’s ability to recover.
The most important thing for companies experiencing financial difficulty to understand is that it is not something to be embarrassed about. In reality, most businesses experience common debt problems at some stage of their lives. Moreover, the accumulation of business debt is usually caused by factors out of a company’s control, including unfavourable economic conditions and slow or non-paying customers. Fortunately, there is help available and the sooner companies take action, the easier their ability to recover.
WE CAN HELP!
At Tax Negotiators, we specialise in providing expert advice and solutions for companies to pay off their debts. We have both formal and informal strategies to deal with a range of business debt including utilities, business loans, rent and tax. We understand that every company is unique, and so place a strong focus on providing tailored solutions for managing debt; therefore, ensuring the fastest path to debt recovery.
Tax Debt Advice for Every Company Size
Whether you are a big or small business, no company can afford to ignore debt. Failing to take action can result in the buildup of interest, late fees and other charges. Worse still, creditors may eventually have the power to commence legal proceedings. In some cases, this can have serious consequences for company directors including personal liability or even criminal charges.
If you’re cannot afford to repay your debt, you definitely cannot afford to ignore it.
What can you do to get on top of business debt?
If your small business is struggling with unmanageable debt, you will most likely need the assistance of professional debt negotiators. There are, however, a number of initial steps small business owners can take to simplify the process:
By calculating the money you owe against the money owed to you, you will have a clearer understanding of your financial position. This will help you to determine how much you can afford to pay now and what needs to be put on a payment plan.
CHASE THOSE WHO OWE MONEY TO YOU
Chasing payment from slow and non-paying customers can give you a much needed injection of cash flow. This can help to settle your most urgent debts and buy more time to seek professional advice.
UTILISE THE FREE SERVICES OF THE NATIONAL DEBT HELPLINE
The National Debt Helpline provides advice to individuals, sole traders and businesses experiencing financial hardship. Their free service includes information on how to fix common debt problems, your rights when dealing with debt collectors and the dispute resolution scheme.
When you contact the National Debt Helpline, they can connect you with a qualified financial adviser for free, independent and confidential advice.
Visit the National Debt Helpline website at ndh.org.au or call them on 1800 007 007.
CONTACT TAX NEGOTIATORS
By speaking with one of our qualified financial counsellors, you can get practical advice and assistance with your business debt. We can assess your financials and formulate a plan to better manage your cash flow, loan repayments and other expenses, enabling you to manageably repay your business debt.
What is tax deductible for a Company?
Understanding your company’s eligible tax deductions can help prevent paying excess tax and accumulating business debt. Deductions accepted by the Australian Tax Office (ATO) are:
- expenses that have been for business use
- partial claims if the expense was partly for business and partly for private use
- supported by records
At Tax Negotiators, we understand the deductions, obligations and concessions relevant to small businesses. We can ensure your company claims all applicable entitlements by their due date, ensuring you do not pay more tax than required.
Debt Advice for Limited Companies
A company is a business structure in Australia that operates as its own legal entity, seperate from its directors and shareholders. Legally, companies own their assets, are responsible for the business’s debts and can sue or be sued; therefore, affording limited liability. However, like every rule, there are exceptions.
In some situations, directors may be held personally liable for unpaid business taxes. This can occur when the ATO issues a Director Penalty Notice (DPN) for overdue taxes related to:
- Pay As You Go (PAYG) tax
- Goods and services tax (GST)
- Superannuation guarantee charge (SGC)
DPNs have been used intensively since early 2022, when the ATO sent out over 50,000 notices in an attempt to bridge the post-Covid tax gap. If ignored, personal liability could result in a director being legally ordered to pay their company’s outstanding tax debts with personal assets such as cash, vehicles or real estate.
Similarly, trading whilst insolvent can also expose directors to personal liability. While the Corporations Act provides some statutory defences, a director must be able to substantiate that they took positive steps to prevent business debt, they had reasonable grounds to suspect solvency or they did not have a managerial role at that time.
Advice for Dealing with Overdue Company Tax Returns
Whether your tax return is overdue by two, five or even ten years, our friendly team at Tax Negotiators can help. We can negotiate any interest, fees or penalties amassed by the overdue business debt, preventing the escalation of recovery action by creditors and debt collectors. We can then work with your company on an ongoing basis, ensuring future tax returns are correct and submitted by their relevant due date.
COMMERCIAL DEBT FORGIVENESS
If a commercial debt your company owed during the income year has been waived, released or forgiven, the ‘net forgiven amount’ rule. This rule requires companies to reduce certain amounts on their tax return (such as tax or net capital losses) to prevent a deduction being accidentally duplicated.
TAX RETURN TOTAL DEBT
A company’s average total debt can be calculated on their tax return by adding the total opening and closing debt figures for the given income year and diving the result by two. From there, the total debt can be assessed alongside the company’s total assets (this is otherwise known as the debt-to-equity ratio), giving directors a better understanding of the company’s financial strength.
If your business debt has been passed onto a debt collector and you believe you are being treated unlawfully, you have the right to lodge a dispute. Many industries have their own ombudsman to ensure that debt collection is conducted lawfully. At Tax Negotiators, our friendly team can help guide you through the dispute resolution scheme.
If your small business has an overdue tax return, contact Tax Negotiators today!
Avoid Financial Difficulty with Tax Negotiators
If your business is struggling to meet its tax obligations, business loan repayments or you find yourself accumulating personal debts while funding your business to keep it afloat, it’s time to seek professional advice. An independent financial counsellor can implement strategies to get on top of your business finances and prevent bankruptcy.
At Tax Negotiators, we provide a no-obligation consultation for small business owners to access free and confidential advice. We can assess your financial situation and implement tailored strategies to deal with your business debts and create a specific plan to better manage your business finances in the future, too.