Avoiding Insolvent Trading Liabilities
If you have received a garnishee notice then you may have more to worry about then tax debts. In order to avoid trading while you are insolvent you need to be informed about the reality of your company’s financial situation. The most obvious way to avoid becoming insolvent is by operating a profitable and efficient business.
Living Beyond Your Means
Even if a business is profitable it may still be losing money because of waste or overspending on staff and infrastructure. Depending on the size of the company small changes can save thousands of dollars and possibly save a failing company. The easiest way to check if a company is in danger of being unable to pay debts is to see if it is spending more money than it is making.
There are ways to keep things in check long before there are problems, and this will also keep a board of directors in the know:
Have outside help – hiring outside accountants is the best way to know the exact status of a businesses finances.
Keep Up With the Industry – What is happening in a company’s industry will affect them no matter how great the business is.
Staff Matters – How your staff are feeling about the company is a good indicator of how well things are going.
Lines of Communication – Making sure there is a good line of communication from lower management through to the board of directors can save a business.
These are only small points that can be easily forgotten in the pace and stress of running a large enterprise. Having the right staff that know what they are doing will also mean problems can be fixed before they arise.
Heads in the Sand
Sometimes a business from general staff right up to the board of directors are oblivious to any problems until something extreme happens. For a board member it would be a director penalty notice while general staff may not know there is a problem until they are laid off. Management in this kind of mindset will not change the direction of the company until it is much too late.
It is much better for a company to remain humble and accept professional advice than to be stubborn and continue on the slow road to liquidation. This can be a problem with management as some people will do and say anything to retain their position and their wages. Unfortunately, this can result in many more people losing their jobs in the long run.
The Good Books
When avoiding becoming insolvent or if you suspect your company is insolvent then you need to have good financial records to refer to. This is where good accountants and accounting firms are worth the money as all financial details will be recorded accurately.
If you are using good financial services then you very well may avoid future problems by identifying current ones before they become unsolvable. Be wise and keep a good tab and the financial progress of your company.