Many people dream of becoming a business owner and entrepreneurship, but bankruptcy has often gotten in the way. Many people make the mistake of believing that if they’ve filed for bankruptcy, they can’t start a business. They may be afraid that their business will go into bankruptcy too and things will be worse the second time around. You can become a business owner after bankruptcy, but there are a few things you need to keep in mind.
You’ll Likely Have Difficulty Obtaining Credit
Most business models tend to require some sort of startup cash, which most people don’t have following a bankruptcy. Obtaining a traditional business loan or a credit card may prove difficult for individuals who have filed for a Chapter 13 or Chapter 7 bankruptcy, so it’s important to be prepared for alternative financing for your business. Perhaps you may be able to discuss your business with family and friends who may be able to finance you, or you can look into financing through committed investors.
Keep Business And Personal Separate
When you start a new business, you’ll likely what to keep the company separate from yourself. This is especially true if you’ve previously filed for bankruptcy as a sole proprietor and your personal assets were involved. Consider establishing your business as a corporation or a limited liability company/partnership in order to separate your business and personal debts. When your business is set up this way, you cannot be held personally liable for debts the business itself incurred.
Pay Your Business Taxes
The most important thing you need to do when starting a business after bankruptcy is to plan ahead for paying your business taxes. They may be higher than what you’re used to, however, if you do not keep them current, you could end up in significant financial distress again. In most cases, tax debt is non-dishargeable, meaning that you would owe the debt despite bankruptcy. Set up a business budget that ensures your tax debt is placed at highest priority.
Contact An Attorney
Understanding how bankruptcy and business can tie together is important for new business owners that have previously filed for bankruptcy, either personally or professionally. At the Law Office of Joel M. Aresty, P.A., we can help you navigate the complex area of business and bankruptcy law and help you best prepare yourself for successfully owning a business post-bankruptcy. Contact us today for more information by calling 1-855-DOC-LAWS or 1-855-362-5297.