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Running your own business is a dream for many people have. The enjoyment of working for yourself and being your own boss is hard to beat. However, in these tough economic times, it can also be quite a challenge. Unlike when you work for someone else, if there isn’t enough money coming in, and the debts are building up, it’s down to you to do something about it.

As you’d expect, businesses get into debt when there is more money leaving the business, than is coming in to it. Lowering costs could be one way to reduce the amount of money leaving your business, and you could look to increase the money the business makes by seeing what benefits or grants you, or your company may be eligible for. However this might not always be enough to solve all your business debts.

When dealing with business debts, it’s important to deal with your priority debts first. These are debts to your more powerful creditors like HMRC, Local Authorities, and mortgage companies, who have the ability to take your property, equipment, cut off your power, and even apply to have you sent to jail. Secondary debts are also important and still need to be managed, but any action from these creditors usually has less severe consequences.

It can be possible to make an informal arrangement with your creditors to pay back the money you owe them. Most will usually accept this as a solution if you can show that your business debt is a temporary problem. More serious, or longer term debt issues, may require a more formal resolution, in the form of a Company Voluntary Arrangement. Both of these options will mean you are still able to trade while keeping your business debts under control.

When there there doesn’t seem any realistic possibility of repaying your business debts, and the company has become insolvent, Administration can help you keep trading while the issue is resolved. If this doesn’t look possible, there may be no other option but to cease trading, in which case Receivership or Liquidation would sell off the company’s assets to repay creditors.

Running your own business can be one of the best ways to make a living, but not all businesses succeed. If you find you are getting into trouble, and your business debts are mounting up, it’s important to get advice as soon as possible. Organisation such as Advice UK and Business Link should be able to help you choose the best option for sorting out your business debts.

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