If you ever find yourself in a position where bankruptcy is your best option, it’s critical that you’re prepared. The following are three things you should know about sole proprietorship and bankruptcy and what it means for you and your business.
1. You and “the business” are not separate entities.
You may wonder if it’s possible to file bankruptcy for the company and not involve your own credit in the process. In short, the answer is no. Even though you have a license from the city for “doing business as” you do not get to sever yourself from your company entirely in times of bankruptcy. While corporations and LLCs are able to keep their personal accounts out of their business, as sole proprietor you are not. Make sure to check all of your finances and consult a bankruptcy attorney to see how your decision to file will affect you in both the short and long term.