Business owners can avoid a personal bankruptcy with implementing a few simple steps when first setting up their business.
First, protect your personal assets and liability by forming a Corporation or LLC. By forming a corporate entity a business owner puts a level of protection around their personal assets. If the business fails, the personal assets of the owners and officers are protecting from creditors coming after them. In the case of a sole-proprietorship or general partnership the personal assets are not protected. In addition, by using a corporate structure the liability of the individual owner and officers are limited as well. Whereas in a sole proprietorship or general partnership there is no liability protection.
Next, make sure you separate your personal and business credit. Entrepreneurs who have made the decision to use a corporate entity to run their business still need to separate their personal and business credit reports. Too often entrepreneurs rely on their personal credit and personally guarantee debt. This eliminates the advantages of the corporate structure for asset and liability protection. You can learn more about building business credit separate from your personal credit at www.bcscredit.com
Last, makes sure you don’t spend money you don’t have.
David Gass
