Bankruptcy When You Own A Business: What You Should Know
Filing for bankruptcy can be a daunting experience. This is a major legal undertaking that requires a lot of time and documentation. If you own your own business, filing for bankruptcy can be even more complex. One of the most important parts of the process is determining your income as a business owner. This can be time-consuming, so it is important to get started as soon as you can. Here are some things you need to know.
You Have to Verify Your Income
One of the first steps in any bankruptcy is providing income verification. If you worked for an employer, you would be able to obtain an income verification from your human resources department or your payroll department. Since you do not earn a W-2, you will have to take a different route to prove your income.
You Have to Provide Documents to Help Calculate Your Income
As someone who owns a business, you need to know which documentation you need to provide to the bankruptcy trustee to verify your income. You should provide a copy of your spreadsheet in which you record your income and expenses. You may also need to provide copies of your bank statements, copies of checks you have written to yourself for payroll purposes if you pay yourself a salary, copies of your tax returns, and any electronic records of money going in and out of your business.
With this information, you and your bankruptcy attorney will calculate how much money you make and submit verification to the trustee.
What to Do if You Did Not Maintain Records
Sadly, some business owners do not maintain proper records. If this is the case for you, your bankruptcy attorney will need a lot of time to nail down an exact amount for your income. If your income cannot be readily identified, your bankruptcy can be dismissed. Ideally, you should work with an accountant moving forward if you intend to remain in business. If you do not want to use an accountant's services, consider using an electronic program to help you keep up with your business and personal income and expenses.
If you are having financial issues as a business owner and you want to file for bankruptcy, you need to speak with a bankruptcy attorney as soon as possible. It can take a long time to gather your documentation for the entire process. Once you verify your income, you will also have to gather information on your personal expenses and debt. This can be a long process but can be beneficial once it is complete.
To learn more, contact a bankruptcy attorney.
