Your Options when your Business Startup

December 15th, 2011 by sammy

Your Options when your Business Startup has a Hard Time Making Payroll

Here’s a depressing little factoid: only one out of two small business startup attempts actually makes it past the fifth year. That’s what the American Bankruptcy Institute says. Business owners, when this happens to them, certainly feel terrible for the circumstances they find themselves in. But they usually feel far worse for all the employees that they need to break the bad news to. A lot of the time, the only way employees can collect what is due to them is to wait in line in bankruptcy court. The thing is though that most businesses in trouble don’t go belly up right away. They go through a period when things are very difficult and they just have no way of making ends meet or even make payroll.

It can happen for a variety of reasons: some businesses, like one that deals in interior design, usually have an “in” season and an “off” season. They also have a hard time making it through an economic downturn when people may not have money to spend on nonessentials such as what the business deals in. Sometimes, they can have a hard time collecting on bills. A business startup usually has little ability to see itself through such lean periods. When a startup has employees, there is one thing that’s pretty clear – payroll has to be made and payroll taxes have to be met. It doesn’t matter how – it could be through borrowing from friends, through applying for hard money loans or through giving out discounts on receivables. However it happens, any business needs to be sure to restructure things so that this never occurs again.

The first resource to turn to should be what you have available already. If you check your books and find that you have $35,000 that you are owed by customers or whatever, you can call them and say that you will give them a 30% discount if they will pay you right away. That way, you can raise some money immediately. Of course, this means you are borrowing on your own future. What will you do for your overheads in the coming weeks or months? Hopefully, things will look up by then. But this move does buy you some time. Not paying your employees is not an option. Not because you have a great deal of pride in dealing straight with your workers but because if you don’t, you could be looking at lawsuits, government penalties and tax liabilities. Also don’t forget to Jaguars vs Falcons Live Stream online.

Tags: Business

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