___________________________________________ "Okay so im seeking help on here as this page seems to be full of great people with good advice. I really
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“Okay so im seeking help on here as this page seems to be full of great people with good advice. I really don’t know much and am struggling to research so thought id ask the people.
So, (25y/o) I had a small business that I had started in 2019, it was going okay and had been running for a bit. It was never really making me money, more so a passion project that I was hoping I could turn into something profitable. I was investing all of my own personal money into it at the time and that was fine. When covid hit and the small business loan came out, I thought it would be a good idea to get that, to try and push the business forward (in retrospect it was a bad call) I thought I’d be able to pay it back within the 2 years and get it intrest free (again, bad call).
I ended up getting just over 11k from IRD. Long story short, in 2022 I stopped the business, it just wasn’t making money, and I was putting a lot of effort into it – I also started to realize I wasn’t enjoying parts of it, so gave up. (This is where it gets a bit, WTF were you thinking). So basically, I spent the loan on manufacturing & suppliers & all that sort of thing for the business. I didn’t have anything left. For a long while, I was just putting it on the back foot and was trying to avoid the thought that I owed 11k to IRD. Late last year, i contacted IRD and told them that the company is not registered anymore, and due to this, they defaulted on the small business loan.
Obviously, now, it is racking up abit of interest and I haven’t touched it. To be fair, I’m actually just avoiding it completely at the moment – its a driving force for anxiety and since it’s in the business name, rather than my name, for some reason that has made my mind think it’ll all be okay haha.
Im just needing some advice on what to do here, what will IRD do to try and recover this debt? I don’t have 11k to pay it off right now, as I’m working myself out of some personal debt at the moment. I’ve been avoiding the business IRD messages all year (just random alerts/statements, nothing alarming), they haven’t tried to call me or chase up or anything since it defaulted but I’m just afraid that the interest will rack up, and then in years to come all of a sudden I’ll owe absolutely stupid amounts.
Im a little ashamed of this but at the same time, i gave it a good shot. Any help/advice would be so great.”
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Sorry to hear about your situation. I can offer some general guidance that might help you navigate this situation. It’s essential to consult with a professional for advice tailored to your specific circumstances.
Face the Issue Head-On:
Ignoring the problem won’t make it go away. It’s commendable that you’re seeking advice, but you should eventually address the issue with the IRD. Proactively dealing with the situation is crucial.
Contact the IRD:
Reach out to the IRD as soon as possible. Explain your current financial situation, express your willingness to resolve the issue, and discuss potential solutions. They may be more understanding if you are proactive in addressing the problem.
Negotiate a Payment Plan:
Many government agencies, including tax authorities, are often willing to work with individuals to set up a reasonable payment plan. If you’re unable to pay the full amount at once, propose a manageable installment plan based on your financial capacity.
Seek Professional Advice:
Consult with a financial advisor or tax professional. They can provide insights into your specific situation and help you develop a plan to address the debt while minimizing the financial impact.
Understand the Consequences:
Ignoring the debt won’t make it disappear. Over time, interest and penalties may accumulate, making the situation worse. Understanding the potential consequences can motivate you to take proactive steps.
Consider Legal Advice:
Depending on the complexities of your situation, it might be beneficial to seek legal advice. A lawyer with experience in business and tax matters can guide you on the best course of action.
Personal and Business Finances:
Separate your personal and business finances. If possible, consider dissolving the business formally. This may have implications, so it’s crucial to consult with a professional.
Learn from the Experience:
Reflect on the lessons learned from this experience. Consider what went wrong in the business and financial decisions and use those insights to make more informed choices in the future.
Remember, this advice is general, and your specific situation may require a more tailored approach. It’s always best to seek advice from professionals who can assess your unique circumstances and provide guidance accordingly.
Hope this helps.
Regards, Clive Fernandes (Financial Adviser)
Director – National Capital
Disclosure: I am the director of National Capital, a KiwiSaver advice firm. The views expressed in this article are the views of the author. The information provided is of a general nature and is not intended to be personalised financial advice. You may seek appropriate financial advice from a Financial Adviser to suit your individual circumstances or contact National Capital.
