Downsizing isn’t straightforward and there are several things that you will need to think about. Outlined below are some of the key steps involved in downsizing.
Downsizing typically involves laying off some workers. This in turn can result in the need for a smaller company headquarters or workspace. Many businesses lease their headquarters or workspaces to avoid the bulk payment and commitment of buying a property outright.
Having said that, a commercial lease is still a big responsibility and it is not necessarily easy to change or get out of. You may need to hold negotiations with your landlord to discuss a reduced rate. They may be able to adjust the lease and provide you with a smaller space to work from.
Failing that, you might have to hold discussions with the landlord to find out if you can exit the lease early without too much of a cost.
When downsizing, you might also need to review your overall objectives for the business. You probably won’t be able to trade as much in terms of volume as you did before. This doesn’t mean that the business has failed. In fact, it could make the business more efficient and you may also end up with a more balanced work/home lifestyle.
When downsizing, you’ll need to think about how it affects you, your employees and your clients. There are several legal steps that you’re going to have to take, and having guidance behind you will help with this.
]]>If you find yourself in these unfortunate circumstances, there are probably multiple debt relief options available to you from which to choose. However, with all of the complexities, potential expenses and time frame involved, determining the best route to take can be critical for your company’s future. One of the most common forms of bankruptcy filed by businesses facing these type of issues is Chapter 11.
Chapter 11 typically allows a company to continue to operate during the bankruptcy process. As the business owner, you will have the opportunity to propose a reorganization plan aimed at helping your company restructure its debt and obligations. Downsizing certain elements of the business, liquidating some or all assets, and renegotiating existing debts are things that are often included within these plans.
Regardless of the uniqueness of your plan, it still must be in the creditors’ best interests. You also reserve the right not to propose a reorganizational plan. In this situation, your creditors would then have the right to create their own proposal.
During this process, there are particular business decisions that will now require the court’s permission, including the following and more:
There are different ways in which your company could potentially benefit from a Chapter 11 bankruptcy filing. First and foremost is being able to continue to operate and produce revenue that can help alleviate your debt burden. Secondly, your creditors will no longer have permission to contact you per a court order. Finally, if you own a small business with less than approximately $2.7 million in total debt, there is a subchapter V option that can greatly speed up the process while also giving you more negotiating power.
On the other hand, Chapter 11 can present more complexities than any other form of bankruptcy filing. This can create the possibility of more expenses and time being involved in the overall process versus some of your other debt relief options. Fortunately, an experienced attorney can carefully analyze your unique situation, determine the best course of action for you and your company, and put you on a path toward a fresh financial start.
]]>Here are three factors to help you make informed decisions.
Forming a business can be costly. But you can do so within your budget, provided you make the right call. Sole proprietorships are simple to establish – you form the business on your terms; you can operate online or from home/an affordable physical location. Further, you need less paperwork to set it up, as you don't have partners or board members.
Partnerships are also easy to set up, and you have more capital for the business.
Corporations can be expensive to form because they involve more paperwork. Additionally, you have to comply with more regulations and tax requirements.
The business structure you choose determines how much you pay in taxes. Owners of sole proprietorships, most partnerships, LLCs and S corporations are taxed individually – business profits are considered personal income and taxed accordingly at the end of the year.
Corporations (except S corporations) pay income tax on their profits. Thus, profits are taxed twice – when the company makes a profit and when dividends are paid to shareholders.
Personal liability is another factor to consider when choosing a business structure. You may find yourself in legal trouble in the future – an employee or a client may take legal action against you, or you may have tax or debt issues. If this happens, your personal assets may be at risk.
Sole proprietorships have the highest risk to personal assets, while corporations offer utmost protection to owners.
When forming a business, it’s vital to seek legal guidance to choose a reliable business structure.
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