Clients call me about filing for bankruptcy, and they own a small business.  It may be a retail store, a restaurant, a trucking company, a temporary employment agency — you name it.  The businesses vary, the nature of the problems vary, the business may be a success and other things are the problem, there is only one constant.  I have never had a small business owner walk in and know all of the things I needed to know to help him sort out his options with respect to his debts.  Never.  Not once.

So, here is a list:

1. Is the business a separate entity, i.e. corporation, LLC, partnership, sole proprietorship (d/b/a) or something else?
2. Assuming that the business is a separate entity, what does it own?
3. What creditors have liens against business assets and which assets do they have liens on?
4. What debts does the business have and which of those are you also liable for?
5. Is the business viable or does it need to be shut down?
6. If it needs to be shut down, what is the best way to realize value from the remaining business assets and is any particular creditor entitled to that value?
7. Which creditors need to be paid first and why?
8. How have you been paid for running the business?
9. How have you contributed money to the business to keep it afloat (contributions to capital, loans)?
10. How is the business taxed (does it file its own return, is its income reported on your return)?
11. What business records exist and where are they?

This is certainly not an exhaustive list, and there may be a question or two that don’t apply to every scenario (especially to a scenario where the business is a viable concern).  However, these are all things that every business owner really should know.

I intend to flesh out this list over the next few weeks.  So, check back.  I will create a new category for Business Bankruptcy to make additional posts easy to find.

Elaine