Business debts can accumulate for a number of reasons such as:

• Poor cash flow control.
  
  
• Excessive perks (such as over expensive cars) charged to the business.
  
  
• Excessive wage bills.
  
  
• Customers late with their payments to you.
  
  
• Spending the VAT and N.I money instead of setting it aside.
  
  
• Using turnover instead of profit to sustain or expand the business.
  
  
• Excessive stock levels, staff pilfering and customer dishonesty.
  
  
• Lack of trade, loss of key contracts, more red tape and regulations.
  
  
• Excessive personal and business debts requiring you to draw more than the business can afford.
  

How your business is structured affects how you and your debts are treated. If you are already in business then generally you will fall into one of the three following categories:

SOLE TRADER

PARTNERSHIP

LTD COMPANY