Can You Start a New Business After Filing Bankruptcy?
There are no laws that will prevent you from starting a new business after you’ve filed bankruptcy. However, there are several things you need to keep in mind as you begin forming a company under the shadow of bankruptcy. Here’s what you should know.
Be Prepared to Face Challenges Getting Credit
Most new business owners need some form of credit to start their companies. However, you may run into some issues obtaining credit, especially if you are fresh out of a business bankruptcy. So, take heart and be vigilant — there are creditors who are willing to give business loans to entrepreneurs. You may just need to try a few different places.
Increase your chances of obtaining financing for your new business by:
- Preparing a very well thought out and well put together business plan to show lenders
- Partnering with someone who has good credit
- Locating investors who are willing to invest in your business
- Check out smaller community banks versus larger federal banks
Keep Your Business and Personal Identity Separate
When you form your business, you have the option to keep your business separate from yourself. After filing bankruptcy, this is likely going to be your best option. You don’t want creditors to have the ability to go after you personally for debts that your business owes. A corporation or a limited liability company will afford you the separation you need to ensure that your personal finances are protected should the new business suffer financial problems as well. Be wary of signing personal guaranties — regardless of whether you incorporate your business the right way, if you sign a personal guaranty, you will be personally responsible for the debts of the business.
Make Your Tax Debt a Priority
Taxes are perhaps the most important debt that you will owe as a business owner. Ensure that you meet your tax obligations first by paying estimated taxes quarterly. If you have difficulty with business taxes, consider working with an experienced accountant to help you keep your taxes paid.
Get Paid for All Your Work
Don’t extend business to customers who are unable to pay for the services or goods rendered. When customers don’t pay you, you aren’t able to pay your lenders, which can result in a tumultuous financial situation. Always require payment up front.
If you have questions about starting a business after you’ve filed bankruptcy, don’t hesitate to contact an experienced bankruptcy lawyer. Joel M. Aresty, P.A. can help. Call now at (305) 904-1903.