Registering a Ltd company isn't the only way to incorporate, there are many other types of company, each with their...
Running your own business is brilliant, I know, I’ve been there. But what happens when your workload slows or stops completely, but your overheads and bills continue to rise? Some things are completely beyond our control, which I learnt to my detriment. My work was mainly sourced from two companies in particular. The workload was manic for a considerable time until I started to experience a lull in late 2008 through to the early part of 2009, at which point, the work had more or less dried up. The reason? All my eggs were in one basket and the nature of my work meant that when the credit crunch hit, my customers tightened their belts and only had necessary work completed. There simply wasn’t enough to survive. However, that’s not to say I didn’t try.
My charges were reduced to a level where only a small profit margin was available, but I was unable to negotiate similar terms with my suppliers and their charges remained constant. When members of staff left, I didn’t replace them to save costs. I did this for almost 5 months at which point, I had started to pay trade creditors with my own money to ensure accounts weren’t placed on stop to make sure I could continue to trade. I also tried to make sure H M Revenue & Customs received regular payments, again paid from my own personal bank account. Unfortunately, my money ran out simply because there weren’t enough funds available in the company to pay me a salary.
I’d literally reached a dead end, and had no idea which direction to go in. Unfortunately, because I’d left it so late there was only one option left available to me and that was to cease trading with immediate effect and put my company into creditors’ voluntary liquidation. This was dealt with by Lines Henry who took the stress away from me and dealt with everything on my behalf.
If you’re thinking “that’s me”, then I have one piece of advice. If you’re a company director who is increasingly using your own personal finances to help your company, think about if it is actually helping the company. I believed that by paying Company bills with my own personal money, was helping my business turnaround, but that wasn’t the case. All I did was simply shift the debt from one creditor to me.
In essence, the money my company owed to trade creditors was still due and payable to me. It’s an easy trap to fall into because you think you can trade out of difficulties and the company can recover at which point you’ll be able to get your money back, but please think about it logically. Is the company likely to be in a position to not only repay you for the money you’ve loaned to it when you’ve paid its bills, and make enough money to service ongoing liabilities to trade as well as pay you a salary? The answer will clearly depend on your own individual circumstances. Sometimes we need an outsider to have a look at what is going on and to help us find the right solution for us as a business owner as well as an individual.
Don’t delay in seeking advice to maximise the options that are available. Lines Henry offers a free initial interview where they will gather relevant information from you and let you know what options are there. There is no pressure and the advice given is clear and concise and always in the best interest of you. Don’t struggle any longer – call Lines Henry on 0800 012 6649.