Business owners tend to face their most difficult trials within their first couple of years. To weather financial uncertainty and stay cash positive, be conscientious about how you manage credit, obligations to creditors, and tax liabilities.
Take Targeted Steps To Strengthen Your Credit
With everything that you have to invest your time and energy in to keep your day-to-day operations running smoothly, building up your business’ credit score might seem like an afterthought. However, you are going to need a solid credit history working in your favor in order to access the best rates for business loans or lines of credit. Moreover, your credit score is a testament to your company’s managerial acumen. Even if you are generating impressive earnings, issues with credit are probably to give pause to prospective lenders, investors, and other business managers who might be interested in merging with your company or acquiring it.
To build and sustain positive credit, make it a point to use less than thirty percent of your available credit. Maintaining a formidable credit utilization ratio and making timely payments on all of your active tradelines will move your score in the right direction. Continue monitoring your credit periodically to monitor your progress.
Choose Lending and Financing Options That Fit Your Needs
If you are looking for a fast infusion of capital, it is important to review your options discerningly. Business owners who are under pressure to improve their cash position in short order often make the mistake of focusing only on their short-term needs and being too dismissive about their long-term objectives. Nevertheless, entering into a loan or financing obligation that is going to subject you to inordinately high-interest rates or encumber key assets could put you in a tight spot.
Many lending institutions reserve funding for companies that are looking to borrow a large sum, but borrowing more than you need carries serious drawbacks. It puts your debt-to-asset ratio into a problematic range, compromising your credit worthiness and financial stability. Avoid biting off more than you can chew by limiting your funding search to opportunities that suit your needs more narrowly.
A Quickbridge loan may be a smart solution for companies that are looking to bolster working capital rather than raise cash for large expenditures or development initiatives. This lending structure gives you the ability to pay down a loan’s principal and interest with manageable weekly or even daily payments. It is an excellent option for companies that have not been in business for very long and are still working on building up credit. One of the best advantages of this funding route is that you can get approval fairly quickly.
Br Strategic About Reducing Tax Liabilities
Organizational tools can simplify tax preparation and help you maximize your savings. Use an accounting program that can keep a running total on the tax liabilities that you incur every quarter. Opt for programs that make it easy to track depreciation to make the most of this commonly underclaimed deduction. Keeping this type of information well-organized will prevent errors or oversights. Furthermore, the best programs can securely store electronic copies of supporting documentation, so you will be able to readily produce all of the records that you would need to withstand an audit or apply for financing and lending opportunities.
Stay current with new credits and rebates that could generate considerable savings. Investing in renewable energy infrastructure, for example, might entitle you to state or federal tax incentives. Likewise, purchasing one or more electric vehicles could qualify you for a sizable deduction through a new federal program.
Ultimately, reducing liabilities should be an ongoing priority in your business’s cash management decisions. Be sure to consider the tax implications as you evaluate major expenditures and adjustments to your resource allocation.
Sound financial management strategies will help you position your growing company for success. Stay organized and stick to your game plan to proactively prevent challenges and make strides toward your goals.
