Legal Options to Keep Your Business in Operation
The many legal concerns that need to be addressed by business owners, especially small and developing ones, make running the business and overcoming business obstacles and competitions really challenging. The taxes, salaries, and company debts to pay – there should be a steady flow of cash or income to ensure that each of these financial issues are addressed on time.
During a weakened economy, however, the challenge for many small firms, just to keep their head above the water, is even increased. Thus, to keep operations going, some resort to applying for business loans – until all financial matters that need to be settled become a debt too big for the company to settle.
This is when some company owners just decide to call it quits, as they are no longer able to stay in the competition to assure the firm a spot in clients’ and customers’ preferences, and the absence of customers means absence of income. When the firm closes, though, will it be enough as settlement for the amount of debt actually owed, or will the debt require other properties, personal properties, that is, as payment?
Business lawyers can tell you that the type of business chosen will actually determine the safety or non-safety of your personal assets when your business is faced with an overwhelming debt. Two most popular business types applied for by owners are sole proprietorship and limited liability company.
While sole proprietorship may be easy to start and run, your financial liabilities, concerning debt payment, are unlimited, which means that creditors have the right to go after your personal assets for payment of your company’s debts. A limited liability company, however, may be more expensive to form and may require higher taxes, but the owner/owners are ensured of limited liability protection, a protection for their personal assets from being taken by creditors or by the court. In both cases, however, you and your partners lose your business.
There is another way – a legal solution, actually, that will not only allow you to settle your debts, but let you keep you company too, even maintain control over it. This is Chapter 11 of the United States Bankruptcy Code.
Owners of small businesses will find Chapter 11 quite complicated, time-consuming, risky and expensive; but this is the only legal solution for them if they want to continue operation and reorganization. Under this chapter, you can:
- Reorganize your finances after the bankruptcy court gives you its approval
- Continue business operation, regain profitability and balance your company’s income and expenses by modifying payment terms and reducing your firm’s obligations
- Either sell all or some of your assets and, if necessary, downsize your business to be able to make initial debt settlements
Business lawyers have the entire arsenal you need to keep your business profitable and on the competitive side. Often, it is only a matter of which legal steps or solutions to take to make to the top.