Running a small business is no simple feat. There are a plethora of reasons why a small business may fail, but it is ultimately a sad possibility of becoming a business owner. It is not only small businesses that fail; large corporations that have thrived for decades also face the decision of whether or not to file for bankruptcy. When it comes to small business owners, it is important that you know when it is time to file for bankruptcy.
A business owner should consider bankruptcy only when he is struggling to manage debt and can only see more debt on the horizon, even when doing his best to manage the debt on hand. Businesses that consistently fail to meet sales goals or have unexpected expenses may be incapable of paying back their lenders. Which form of bankruptcy to file or whether to pursue bankruptcy at all depends on the organization of the small business.
Personal Assets at Risk
Debt-ridden small business are advised to consider bankruptcy if the business owner’s assets are in danger. Partnerships and sole proprietorships are most often at risk, as such types of business organizations require owners to sign personally for loans. If such a company fails to make necessary payments, the personal assets of the owner or owners may be seized over business-incurred debt.
In order to avoid this fate, entrepreneurs considering starting a business should incorporate it as a limited-liability entity (LLC). This protects the business owner’s personal assets, as all debts are tied to the business itself. If an LLC is failing, the proprietor may simply close the doors as bankruptcy will only work against the business.
While an LLC is considered the safer business model, there is still a chance that the business owner’s assets can be at risk. Small business owners who fail to separate their personal and business finances are at risk of having their property seized. The courts may determine that the business is not a separate entity, disregard its corporate status, and allow goods to be pursued by debt collectors.
Working with an Experienced Bankruptcy Attorney
If your small business is considering bankruptcy as a debt relief option, it is important that you have an experienced bankruptcy attorney at your side. At E. Orum Young, we have more than 35 years of experience and have filed more than 20,000 bankruptcy cases in Northeast Louisiana. No two cases are the same, and we handle every case with that in mind. We pay personal attention to each client and have rush filing services available if needed. Northeast Louisiana Legal Services has recognized Mr. Young three times as a community leader, presenting him with the Pro Bono Attorney award for his dedication to serving his community.
Discuss bankruptcy options for your small business with a bankruptcy attorney when you contact us today.
