How to Advice for Minimizing Small Business Debt

Business debt comes from many sources, including non-paying clients, the cost of space, inventory and equipment, and loans. Acquiring too much debt can be the downfall of a business, preventing growth and the ability for a business to sustain itself. 

Whether you own a service, wholesale or retail operation, managing debt is essential to the continuing success of your venture. Fortunately, there are many things a small business owner can do to minimize debt.

 

Instructions

1. • 1
     Negotiate with suppliers to get a better bulk discount whenever possible. Avoid buying more inventory and equipment on net or credit terms than you need for the upcoming season.
   • 2
     Defer end-of-the-year payments from clients until the new year, if possible, to reduce the taxes you must pay. For example, if a client pays you on December 31, that income would be taxed when you file your return. However, if that same client paid you on January 1, the income would not be taxed until the following year.
   • 3
     Borrow only the minimum amount of money your business needs to sustain itself and thrive. Most loans come with interest rates, which means more debt for your business.
   • 4
     Lease only the square footage you need, whether you're renting an office, warehouse or storefront. It's less costly to lease what you need and then rent a larger space in the future if needed, as opposed to paying several years for a space that's too big for your needs.
   • 5
     Offer credit accounts only to clients and customers with a pristine purchasing and payment history. Doing so will prevent your business from going into more debt because of clients not paying for goods and services.
   • 6
     Deduct the costs of unpaid-for goods on your business tax returns to help offset any debt you owe to suppliers. This only applies to businesses that retail tangible products, not service businesses.