If you have to close your small business, the goal should be to try to close it without any remaining debt. Unfortunately, the reality is that closing without major debt isn’t always possible. If you owe large debts, then bankruptcy may be the right solution to closing and getting out of the debt that your business has created.
Before you decide on bankruptcy, there are a few other things to consider. You should:
- Look at the business assets you currently have and what may have value if sold
- Consider if you can afford final payments to employees, creditors and the state and federal government for tax purposes. If you can pay those debts or cover the majority without bankruptcy, then you may be able to avoid it.
- Check your business bank accounts and business-related credit cards. Be sure to verify any payments and to cancel future payments.
When do you know that it’s time to consider a business bankruptcy?
If you find yourself in a position where you’re not sure you’ll be able to cover your debts or are in overwhelming debt and know you want to shut down for good, then a business bankruptcy could be a good option.
Even if you have to shut down your business with a bankruptcy, that doesn’t mean that you won’t be able to open a new one in the future. Many business ventures fail, so this is just something to learn from. You can learn more about your legal options here on our website. Bankruptcy may be the right choice to help you move on sooner from a failed business.