Declaring bankruptcy or losing your business aren’t your only options if your current company is too far in debt because of federal and state tax issues. In certain cases, corporate restructuring can be a legal way to shed your business’ tax debts and still keep your company going. By shutting down your company and restarting it as a newly formed business entity, you can free your business of the weight of thousands of dollars owed to the government.
Corporate restructuring is not simple, and doing it incorrectly can mean that your tax debts follow your company into its new form. We can help you examine your financials and decide whether or not restructuring is right for your company. If it’s determined that corporate restructuring is the right approach, we can make sure it is done correctly and within the confines of the tax laws.
If you previously underwent corporate restructuring and are still being followed by your old entity’s tax debts, our experts can help you fix this.
Contact our office today to schedule a free consultation.
What is Corporate Restructuring?
Corporate Restructuring is simply reorganizing the structure of an organization to create opportunity for more profits from its operations. It’s the process involved in changing the organization or financial elements of a business. Corporate restructuring can involve making dramatic changes to a business by eliminating or merging whole departments or changing spending habits and budgeting.
Two most common processes for corporate restructuring:
- Financial Restructuring: might occur due to a drastic fall in the sales because of the adverse economic conditions. In this case a company might change the equity pattern, cross-holding pattern, debt-servicing schedule and the equity holdings. All this is done to sustain the profitability of the company and sustain in the market. Generally, financial or legal advisors are hired to assist the firms in the negotiations.
- Organizational Restructuring: The Organizational Restructuring means changing the structure of an organization, such as reducing the hierarchical levels, downsizing the employees, redesigning the job positions and changing the reporting relationships. This is done to cut the cost and pay off the outstanding debt to continue with the business operations in some manner.
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