Article by Cape Town insolvency lawyer - Nanika Prinsloo
When a business owes SARS and the debt cannot be paid, it usually has a bigger effect on the business owner’s mind than on the business itself. Often the problem is exacerbated by the fact that the business is the only source of income of the owner, which makes it hard to walk away. A lot of the time some business owners continue with a failing business that should have been canned months ago, but never stop worrying about SARS.
The emotional price is high: fear and worry, depression, sleepless nights and subsequently damage to health as a result of stress with no solution in sight. Energies implode which in turn impacts a business negatively. A lot of times the owner thinks that the business can manage itself out of the problem. More often than not, they cannot.
This article deals with the psychological effect of a failing business, and how you can legally and successfully overcome the problem so that you can stay on your feet and do bigger and better business than ever before.
Here are some problems business owners struggle within these situations: how do you deal with the SARS (and other) debt; do you quit and if so, when do you quit; will you lose everything you own; how can you get rid of the problem by not losing everything; is SARS going to lock you up for the debt. A heavy burden to carry for sure and worrisome thoughts. What makes it worse is if you do not have any information about your options, you cannot make a decision and then not take action.
It is regrettable that not every business owner is aware of the legal solutions available to them because it will certainly lighten the load, make for easy decision making and would save a lot of money and sleepless nights.
One excellent option to use is to liquidate the business as soon as is possible and start over. Liquidation is one of the best strategic tools to use to move from a feeling of no power of “I am in trouble and cannot cope” to an empowered position of “let’s do this as soon as possible and move on”. It avoids months of worry and money down the drain. It saves the mental agony the owner goes through before action is eventually taken.
Apart from liquidation, it is critical that the business owner has a shift to clinical thinking where one uses the facts of liquidation to make your next move. It is not just a shift in the business, but a shift in the way you think about your business and the legal recourses available to you.
Liquidation can get rid of debt. What is required is not just a liquidation of the old entity, but also the liquidation of the misinformation and fears in the mind of the owner.
Once the shift happens, and it usually does after a consultation with an attorney, a business can be transformed from being riddled with debt to being debt-free. The business owner can be educated on the legal options available to get rid of the problem and continue to trade while your assets.
It is critical that we do not get burdened and tied down by debt that the business cannot pay. It is just as critical to stop and start over as soon as is possible. It is disastrous to borrow more and more money to stay afloat, because it is possible to stop and start over. SARS does not have magical powers and must behave like other creditors, save for the fact that they can debit your bank account once an assessment was made. SARS thrives on fear and intimidation and everything they say and do is designed to put fear into you, the taxpayer. There are options available to get rid of SARS debt and liquidation is the best tool there is. It is possible to liquidate your business and get rid of SARS debt while you continue to trade.
