Smart Bankruptcy Guide

Small Business Incorporation: Are Your Personal Assets Really Safe?

Many entrepreneurs understand the benefit of small business incorporation, but they don’t realize how easy it is to lose their “corporate status” if they get sued or end up in bankruptcy. This is dangerous because then the court can come after their personal assets (like their house, car, savings, etc)!

Today, I will review a little bit of why incorporating is so important for small business owners, and then tell you five simple steps you can follow to protect your personal assets, even if your business gets sued or goes through bankruptcy.

Small business incorporation makes sense for a couple of reasons. First, because it protects you from personal liability, and second, because it offers you some great tax advantages. For today, we’re going to just focus on the personal liability part.

When you incorporate, your business becomes like another person. This other person has it’s own bank account, it can own things like property, and it can take risks. Even if that “other person” (your business) goes completely bankrupt or gets sued, you are safe (assuming you do everything correctly).

This is important because many new businesses fail, but you as the entrepreneur don’t want to fail. You want to pick yourself back up and start your next business which will be even more successful. Failure is a necessary way to learn, so we want it to be as painless as possible. Small business incorporation is the key to doing just that.

When everything works like it should, then yes, you personally are protected. But there are certain situations where your corporate status doesn’t help you out, and every business owner should be aware of them!

You see, setting up a company gives you so much protection from liability, that unethical people in the past have tried to take advantage of it. They have gone through small business incorporation just to create “shell corporations”, or businesses just for the purpose of liability protection, to help them get away with various crimes.

Of course, the law had to be modified to weed out these people and make sure they were appropriately prosecuted. But in the process, the requirements for honest small business owners became tougher. Some extra steps are now required to make sure your corporate status stays intact.

By the way, whenever a court decides to waive the corporate protection and actually prosecute the owners behind the company personally, they call it “piercing the corporate veil”. (Lawyers always like to come up with fancy names for things.)

Following are the top five ways to protect you personal assets after going through small business incorporation. Make sure you do these correctly, and you can be sure that even if your business experiences a colossal failure, or gets sued out of existence, at least your personal assets are safe and you can start over.

1. Never Engage in Fraud or any Criminal Act

This sounds simple, but many small businesses owners unknowingly break the law. Never sell a product you know is defective or doesn’t work, misrepresent something in your advertising, forge any signatures, or pull a bait and switch (offer a great deal to get people in the door only to tell them it is out of stock so you can sell a substitute.) Run your business honestly and with integrity every day, and it will pay off in the long run.

2. Never Misrepresent Your Corporate Officers or Members

Don’t ever lie about who is involved in your company. When it comes time to ask for investors, or get people to support you, you may be tempted to exaggerate about who is actually working with you. If they haven’t actually signed your operating agreement (an important step in small business incorporation), then they aren’t your partner.

3. Make Sure Your Follow All Corporate Formalities

If you are going to claim you are a company, then you’d better act like a company. Small business incorporation requires plenty of little steps that can be easy to forget. That means you have to file all important documents and keep records of them (your operating agreement, articles of incorporation, and DBA for example). You also have to keep detailed financial records. You could pay a lawyer to put all these together for you, but this will cost you thousands of dollars. I recommend taking the time to learn these relatively simple steps yourself. There are some great resources out there.

4. Keep Your Business and Personal Assets Separate

The business has to have it’s own bank account. The money in that bank account is not your money. It belongs to the business. In fact, if you decide one day come along and take some money out to buy yourself a Hawaiian vacation, that is called embezzlement (a crime)! Often, the first time through small business incorporation, new business owners (especially if they are the sole owner) don’t understand this concept. The money in the company is not theirs. The company is like a separate person, and all assets must be treated as such.

5. Never Treat the Business’ Assets as if They Were Your Own

Don’t deposit your personal checks into the corporate account. Don’t use company money to finance your personal life and hobbies. Don’t lend the company car to your buddy for a weekend excursion. Don’t set up a cot in the back of the office and start living there! Again, the business and yourself are two separate people. Treat them accordingly.

With these five basic steps, you can be sure your small business incorporation holds up in court in the event your business goes under.

Many successful business people, from Donald Trump to John D. Rockefeller, went through periods of ups and downs in their life. Not every company they bet on was a success. But they managed to survive and lived to fight another day because they where smart enough to go through small business incorporation correctly. They followed the above five steps to make sure they wouldn’t lose their corporate status in the event of a lawsuit. They made sure that their personal assets were safe, even if the company went bankrupt.

Steve A
http://www.articlesbase.com/home-business-articles/small-business-incorporation-are-your-personal-assets-really-safe-124511.html

Think Like A Business Owner!

After reading the quite a number of books on investment including Rich Dad’s Guide to Investing, I have concluded that it is important to treat any investments as if I am going to buy over the business. What do I mean by that?

For example, if I were to buy a share of a company, then I would be one of the many shareholders who own the company. Yes, I would only own a very little portion of the company. But that does not give me the excuse that I should treat my investment decision lightly just because I am a small investor. I must treat any investment decision as though I am going to buy over the business. If I am not interested to buy over the company, then why should I be interested in investing any money in that business at all?

If I am going to invest as if I going to buy over the business, what type of business should I invest in?
Before I can answer this answer, I feel that I must think like a business owner first. When I think like a business owner, then I will understand the pros and cons of various types of businesses. Also, I will be able to identify and manage the risks involved. This will help me to make a better investment decision.

As a business owner, I definitely want my business to be profitable. Thus, the first thing that I want to do is to find out whether the business that I am interested to invest is profitable. If it is not profitable, then I will not want to invest in it.

The second concern that I have is whether the business can continue to be profitable in the long run.
To address this issue, I will need to look at a few factors.

Firstly, does the business have a competitive advantage over the others in the same industry? If the answer is yes, then the chance of the business continues to make profit in the long run is increased. Otherwise, the chance of the business continues to make profit in the long run is decreased.

Secondly, is there a barrier to entry for that particular industry? If the answer is yes, then there is little or no risk of copycat businesses that will come into play and steal away the profits. If the answer is no, there is a high chance of other copycat businesses that will come into play and eat up the market shares.

Thirdly, does the business need to reinvent itself frequently? If the answer is yes, then there is risk that it will lose its competitive advantage if it does not. That is the competitive advantage of the business is not durable and easily lost. This means that it may not continues to make profit once the competitive advantage is lost.

Lastly, does the business need to spend a lot of money to reinvent itself? If the answer is yes, then it may not be a good business to invest in since there is a lot of wastage. For example, a transport business will always need to spend money to buy new transportation vehicles. It will also need to spend lots of money on maintaining and repairing the transportation vehicles. In other words, a large portion of the profits is used for reinventing itself. And there is little left to build the cash reserve.

As a business owner, I will definitely want my business to continue to make profit in the long terms.

My third worry is that whether the business is rich in cash reserve. If a business is rich in cash reserve, it means that there is no risk of the business going bankrupt because cash flow problem. A profitable business should be rich in cash reserve.

Next, I will be interested in what is the return on investment on the business. For example, if I were to invest $1000, what is the expect return per annum. If the return on investment is very little like $1 for every $1000 invested, then it does not make sense for me to own the business. If the return on investment is high like $200 for every $1000 invested, then it make sense for me to own the business because I know that I am not risking a lot of money for a little return.

Lastly, do I understand the business? If I do not understand how a business works and makes money, then I will not be able to identify the risks involved. If I do not know the risks involved, then I do not know how to manage the risks. Then, I am likely to lose money. If that is the case, then it makes sense for me to invest only in businesses that I can understand.

The above are just some of the considerations that I can think of at the moment. These considerations are based on what I have learned so far about investment. It is definitely important for me to think like a business owner if I want to invest properly to accumulate great wealth.

* DISCLAIMER *
The author only provides the material and information as a layperson’s views about an important subject. The materials and information are from sources believed to be reliable and from his own personal experience, but he neither implies nor intends any guarantee of accuracy.
All the materials, information and procedure in this book are only the author’s personal opinion. You must consult your own professional advisor and other reputable sources on any matter that concerns you or others.

The author, publishers and distributors are not competent and do not profess to give legal, accounting,
medical or any other type of professional advice. The reader must always seek those services from
competent professionals who can review your own particular circumstances.

The author, publisher and distributors particularly disclaim any liability, loss, or risk taken by individuals who directly or indirectly act on the information contained herein. All readers must accept full responsibility for their use of this material.

Max Ng
http://www.articlesbase.com/non-fiction-articles/think-like-a-business-owner-93641.html

The Ins And Outs Of Bankruptcy

When debt takes everything you’ve got, sometimes the only option left is bankruptcy. It happens to many different people for many reasons and is a legitimate way to get out of financial trouble if you’re doing it for the right reasons.

Bankruptcy is a process that can help people or businesses repay their debts under the protection of bankruptcy court or wipe out their debts completely. As soon as you file either type of bankruptcy, your creditors are no longer allowed to take action to collect debt from you without court approval.

Claiming bankruptcy can lower or remove any debt you owe, but it should always be viewed as a last resort, because although it either partially or completely eliminates debt, it also has consequences.

There are two kinds of bankruptcy to claim: liquidation or reorganization. With liquidation, your assets are sold off to pay your creditors. After this sale and repayment your creditors are no longer allowed to request repayment from you, but the bankruptcy will stay on your credit history for 10 years, preventing other creditors from lending you money.

With reorganization, you file a repayment proposal with the courts, which results in you repaying some debts in full, repaying others partially and repaying some not at all. These payments plans usually run from three to five years.

It is important to realize that some debts cannot be forgiven through bankruptcy. Check out the following list:
– Debts you forget to put on your bankruptcy papers – Alimony or child support – Debts incurred through injury or death resulting from drunk driving – Most types of student loans – Any fines imposed for breaking the law – Any tax debts incurred

Usually once you have claimed bankruptcy, your wages are garnished and the courts will make payments to your creditors. If you stick with the repayment plan, those creditors may issue you credit in the future. However, you are unlikely to obtain credit from other creditors as the bankruptcy will stay on your credit history for seven years.

Even though bankruptcy can ease the financial burden, it is not for everyone. It will not fix bad spending habits or poor financial planning. And, it will make things considerably more difficult for you financially in the next 7 to 10 years. So, if you can prevent bankruptcy, you will be much better off.

Bankruptcy can be prevented through good financial planning. This means avoiding impulse spending, charging items to credit cards, buying more house than you can afford, making high-risk investments, or getting financially involved with others who have bad finances. Some good things that can improve your finances include creating and maintaining a realistic budget, making responsible purchases and tearing up any unwanted or high-interest credit cards.

If you think your debt is beginning to get out of control, consider consulting a financial expert or a credit counselor. They can help you turns things around.

Kathy Burns-millyard
http://www.articlesbase.com/non-fiction-articles/the-ins-and-outs-of-bankruptcy-53808.html

Financial Planning: Get Answers About Bankruptcy Before Its Too Late

The very word “bankruptcy” puts fear into many people’s hearts. For years, the word has been equated with being destitute, being unable to pay bills and being financially insecure. But is that all that bankruptcy is about? The truth of the matter is that many people simply don’t understand what bankruptcy really is. For many people, bankruptcy is a way out of a bad situation and a hand up when they need it most. It is also a life changing experience. These questions and answers are designed to teach you about bankruptcy, what it is, what it can do and what it cannot do.

What is bankruptcy?

Bankruptcy is a legal declaration of the inability to pay your creditors. This does not mean you have no money. On the contrary, many people who declare bankruptcy have enough money to live on. Instead, it means that you do not have enough money to match your basic living expenses and pay people to whom you owe money. How much this is can vary from person to person because every person needs a slightly different amount of money to meet their living expenses. Since there is no set amount, bankruptcy is often granted by a judge.

How do I apply for bankruptcy?

Laws very from state to state, of course, but applying for bankruptcy isn’t very hard. At its base, it simply requires the filling out of bankruptcy paperwork. This paperwork will ask you about various items, such as your current income and your current assets. Using this paperwork, the bankruptcy judge will decide if you qualify for bankruptcy and how it will work for you. You may want to speak with a lawyer before filling out this paperwork. A lawyer will be able to inform you of what kind of bankruptcy would best suit your needs and will help you identify some of the particulars.

How does bankruptcy help me pay my debts?

There are several different types of bankruptcy, all of which function in different ways. Businesses have several different versions of bankruptcy, some of which are useful for individuals. In general, should you need to file for bankruptcy, one of three things will happen. Either you will be required to pay a fixed amount per month until your debts are paid off, your assets will be liquidated and sold off to pay your debts and you will pay monthly to cover the rest, or your assets will be liquidated and sold off and then you will be absolved of any further debt. With any of these options, creditors can not attempt to collect above and beyond the agreed payment.

What are the most common types of bankruptcy?

The most common types of bankruptcy are called Chapter 7 and Chapter 13. A Chapter 7 type of bankruptcy is a basic liquidation. This is when the courts sell your assets, use the money to pay off creditors, and call it even. After that, creditors are not allowed to attempt to seek further payment. chapter 13 bankruptcy is rehabilitation with a payment plan. This is the kind of bankruptcy you file if you have steady income. It cancels debts up to a certain date and fixes a payment per month for anything else owed. Under Chapter 13 bankruptcy, assets are not liquidated, but it does require certain amounts of payment every month.

What happens to businesses that file for bankruptcy?

Essentially, the same thing as happens to individuals. Either the business is shut down, their assets liquidated and their creditors paid off or they set up a payment plan and pay a certain amount per month. The only difference is when it comes to Chapter 13 bankruptcy and what is considered “disposable income.” For businesses, disposable income is generally taken to mean “profits,” although there is still some wiggle room here. Some less than honest business people will quickly give themselves a raise before filing, thus making it look like they make less profit than they do. However, barring small details, it is essentially the same for a business as it is for an individual.

Deanna Mascle
http://www.articlesbase.com/finance-articles/financial-planning-get-answers-about-bankruptcy-before-its-too-late-131405.html

Chapter 7 Bankruptcy Attorney Cook County 1-888-536-6607

http://www.freydinlaw.com/ Call 1-888-536-6607 Today Chapter 7 Bankruptcy Attorney Cook County, chapter 7 bankruptcy Attorney Cook County, IL Chapter 7 Bankruptcy Attorney Cook County, Illinois

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Uncharted: Chapter 13 (7 treasures)

Treasure locations

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Madoff Into Personal Bankruptcy – Bloomberg

Bernie Madoff is already behind bars and soon may be bankrupt. Victims’ lawyer seeks to force Madoff into personal bankruptcy and the US Marshals seize Madoff’s boats at his Palm Beach Estate. (Bloomberg News)

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Zuma Dogg Discussed L.A. City BANKRUPTCY PROTECTION

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Chaos Legion Chapter 11 Boss Delacroix

OMFG!!!! (Bleep bleep Bleep) That was a bit insane. Thank you super long life bar. Thank you multiple healing items.

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Implementing the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005: An Overview for Judges, Staff Attorneys, and Law Clerks

Federal Judicial Center

Implementing the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005: An Overview for Judges, Staff Attorneys, and Law Clerks
AVA21531VNB1, 4722-V/05, June 29, 2005

On April 20, 2005, the president of the United States signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This is the first major overhaul of the nations bankruptcy laws in 27 years. Most of the Acts provisions take effect 180 days after the Acts passage. This 90-minute program highlights the main changes brought about by the Act and identifies the main questions judges will face. It has two main segments: one on consumer issues and the other on business issues. The Hon. A. Thomas Small (Bankr. E.D. N.C.) will moderate the program. The panelists are Hon. James Haines (Bankr. D. Me.); Hon. Bruce Markell (Bankr. D. Nev.);Hon. Elizabeth Perris (Bankr. D. Or.); Hon. James Walker (Bankr. M.D. Ga.); and Hon. Eugene Wedoff (Bankr. N.D. Ill.).

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