The first thing you need to understand is that in most cases your company, whether it’s an LLC or a corporation, is a separate and distinct entity under the law. Envision your company as it’s own legal person, totally separate from yourself. Just because you file for bankruptcy protection does not always mean that your company must follow suit. In fact, if the company is small and closely held there may be nothing for a trustee to distribute to creditors and there may not be a reason to have the company file.
There are, however, situations where you may need to have your company file bankruptcy. In cases where there are assets that are being chased by creditors and the company owes payroll taxes, having your company file for bankruptcy may be helpful. Owners of small companies are often liable for certain payroll taxes which are non-dischargeable in bankruptcy. Rather than allowing the creditors to get ahold of your assets and satisfy your obligations to them, it’s sometimes preferable to file bankruptcy to stop all the collection activity. Tax claims are then be given priority so they will be paid and satisfied before any other creditors.
Another reason that having your company file for bankruptcy may be a good idea is that it allows the company to quickly shut down and prevents creditors from continuing collection efforts against you. Even though you as the owner may not be the target of their efforts, you will likely be on the receiving end of their attempts to get their money. Filing can make it easier to deal with just the trustee rather than a host of creditors.
Even if you don’t have your company file bankruptcy, your ownership is still important. Your interest in the company is an asset which must be accounted for when you file a personal bankruptcy. The value is determined by compiling a basic balance sheet of assets and liabilities. Your interest in the company is also important in that it will be used to calculate your income. Profit and loss statements from the company will come in handy here. Thus, even if you file individually, you will need to know about your company’s financial health.
If you find yourself needing the services of a Jacksonville bankruptcy attorney, please call the Jacksonville bankruptcy attorneys at the Law Office of David M. Goldman. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice regarding your financial options.