In many instances, the factors that force youinto a business bankruptcy are beyond your control. You may have a serious illness or lose a key partner, or your market may simply collapse. Often, though, it’s the things you do or don’t do that will get you into trouble. Here’s a list, based on a quarter of century’s worth of experience, of some of the mistakes that will increase the likelihood your business will end up in bankruptcy.
Strategy #1: Wing It
Far too many people go into business without any type of plan, hoping everything will be okay. If you don’t know what your cost of materials or services is, or you can’t identify your target market, or you don’t have a handle on what will make your business profitable, you’ll likely encounter a number of surprises and won’t be equipped to handle them when they arise. The more time you spend on creating a realistic business plan, the less risk your business will fail, or that you’ll end up with substantial debt if it does. The money spent on good business plan software is well worth the expense. Once you are up and running, you have to have systems in place to watch the finances, expenses and cash flow. Ignorance IS NOT BLISS! See Part Two.
Strategy #2: Don’t Pay Your Taxes
When things are tight and you feel like you’re on the cusp of real success, you might tell yourself that you can use the money set aside for sales taxes or payroll taxes for operating expenses. You tell yourself that you’ll catch up in a couple days or a week, when the next payment comes in. It’s usually magical thinking and it’ll get you in trouble in a hurry. Two additional caveats—owners and managers are personally liable for the employee withholding portion of payroll taxes, and those taxes cannot be discharged in a bankruptcy.
Contact Neuner & Ventura, LLP
We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
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