How to Avoid Personal Bankruptcy as a Business Owner
Owning a small business is a dream for many people. Unfortunately, there are a lot of risks that come with business ownership and some businesses may eventually need to declare bankruptcy if they face serious financial challenges. For a business owner, avoiding personal bankruptcy along with business bankruptcy is important. Fortunately, there are several tips you can follow that can help you avoid having to do this.
Create Separate Ownership Structure
When you are going to start a business, you will need to create a legal structure. The simplest form of structure is to form the business as a sole proprietorship, in which case the business will be held directly in your name. While this can make it easier to establish, it adds a lot of risks as your name will be directly placed on various agreements. A better option is to form an LLC. With an LLC, the only funds you can lose are the money you put into the business and it could help you avoid personal bankruptcy.
It is common for a business owner to be asked to guarantee various agreements. These can include business loans, property leases, or vendor contracts. When doing this, you are personally taking on the liability for repayment. Avoiding this practice could help protect your personal solvency in difficult situations.
How an Attorney Can Help
Managing the legal structure for a business and filing bankruptcy in the right way is very important. To help with this, hiring a West Jordan personal bankruptcy attorney when you are a business owner is very important. When you’re hiring a bankruptcy attorney West Jordan business owners will receive the support they need to structure their business the right way and keep their business and personal assets separately. When looking for a bankruptcy attorney West Jordan Utah business owners should call the team with Alta Legal. The professionals here can offer the legal support you need to evaluate your bankruptcy options for yourself and your business.