How do I proceed if my balance sheet is not balanced?
February 7, 2024 | 50,00 EUR | answered by Xenia Zellerbach
Dear tax consultant,
my name is Gerd Schmid and I run a medium-sized company. In recent years, we have achieved good profits and have been able to steadily expand our business. However, I have noticed that my balance sheet is no longer balanced. This concerns me greatly and I am unsure how to proceed in this situation.
Regarding the current situation: On the asset side of my balance sheet, there are high receivables from deliveries and services as well as a high inventory. However, on the liability side, especially towards suppliers, my liabilities are significantly higher than the equity. This results in negative equity and an unbalanced balance sheet.
I am thinking about how this situation could affect my company. I fear that this could undermine the trust of my business partners and possibly also my bank. Additionally, it could have implications on my creditworthiness and my ability to secure financing for my company.
My question to you as a tax consultant is therefore: How can I proceed to balance my balance sheet again and ensure the financial stability of my company? What measures can I take to strengthen the equity and reduce the liabilities? Are there possibly any tax options to improve this situation?
Thank you in advance for your support and advice.
Sincerely,
Gerd Schmid
Dear Mr. Schmid,
Thank you for your inquiry regarding your unbalanced balance sheet and the associated concerns about the financial stability of your company. It is important to take action early to improve the situation and avoid negative impacts on your company.
First and foremost, it is important to analyze the causes of the negative equity and high liabilities. In your case, high receivables from sales and services, as well as a high inventory, seem to have led to an imbalance in your balance sheet. To balance your balance sheet again and secure the financial stability of your company, there are various measures you can take.
To strengthen equity, for example, you can carry out an equity increase by converting shareholder loans into equity or raising new equity through deposits or participations. Profit retention and the retention of profits can also help to strengthen equity.
To reduce liabilities, you should conduct a thorough analysis of your accounts payable and possibly negotiate with your suppliers to extend payment terms or agree on discounts. Optimizing your inventory levels can also help reduce liabilities.
Furthermore, you can take advantage of tax options to improve your situation. For example, you can consider creating provisions to claim liabilities for tax purposes. Tax depreciation and provisions for impending losses from receivables can also help improve your balance sheet.
It is advisable to sit down with an experienced tax advisor to develop an individual solution for your situation and plan concrete actions. A good tax advisor will assist you in balancing your balance sheet again and securing your financial stability.
I hope this information is helpful to you and I am available for further questions.
Best regards,
Xenia Zellerbach
