A sole proprietor is a business entity in which there is no legal distinction between the owner and the business: the owner is the business and the business is the owner. The owner receives all the profits and is solely responsible for all losses and debts.
Sole proprietorships are enticing because they are easy to organize and require a small amount of start-up capital. And, the owner reaps all that he or she sows — profits or losses. On the other hand, should the business fail, the owner is also solely responsible for all debts and creditors may force the sale of the proprietor’s personal property as well as their business property to satisfy their claim. In this case, the sole proprietor will typically file personal bankruptcy under either Chapter 7, 11 or 13.
If you are a small business person or a sole proprietor struggling with business debt and worried about falling behind, we recommend that you see us for a consultation and learn more about your options. To get the most from your consultation, you should prepare (on your own or with your accountant) your income and expenses as it relates to your business. You will also need to organize your personal household income and expenses so we can analyze whether filing bankruptcy is your best option. If so, those numbers will help us determine which type of bankruptcy to file. Each situation is unique and the decision to file bankruptcy is a personal decision that requires a great deal of consideration.
Bankruptcy can provide a fresh start for struggling small business owners. There may also be non-bankruptcy options that help you meet your financial goals. Contact Cossitt Law at (406) 752-5616 to set up a consultation and we can help you sort things out and get back on track.