During the lead-up to the holiday season, many businesses have accrued debts that remain unpaid. Taking care to organise and finalise these payments promptly before the end of the year can significantly decrease the strain on the business’ finance and labour in the early months of 2019.
The various steps that can be taken to maximise your business’s debt collection include but are not limited to:
- Updating your list of creditors in order of highest to lowest priority
- Contact your debtors regularly (the squeaky wheel usually does get the oil first)
- Consolidating the business’s current debts
- Seeking the advice of a lawyer. It is important to understand that a lawyer can commence court proceedings on your behalf where typical debt collection agency cannot.
Review your current business structures
The business structure you choose can have taxation, succession and liability consequences. In many cases, your business structure does not remain constant and unchanging. It is helpful to review your businesses’ current size, financial stability, profitability, and product and service standards in order to determine whether the current business structure needs to be altered.
Common business structures include:
- Sole traders
You may have a new project/business line planned for 2019 it might be best to run that out of a new company or trust.
Technology and unique systems you develop to operate your business should be in a different legal entity than the one that operates your business. You can do it retrospectively, start planning this now for 2019.
Company Succession Planning
The next steps as to what happens to the ownership or control of a company when the owner dies is often ignored. Plans such as buy-sell agreements can help to create a buffer against drama, financial loss and internal instability. Business partners are often left in limbo and forced to share control of a company with their ex-partner’s successor. This can be extremely detrimental to the business. In order to ensure that your succession plan meets the current and future needs of your business it is best to consult with a solicitor who can assist you in devising your plan.
About the authors:
James Tadros completed a Bachelor of Laws/Bachelor of Commerce degree in August 2015 from Murdoch University, WA. He was admitted as solicitor of the Supreme Court of Western Australia in 2016. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.