Small Business Do's And Dont's

What to do and not do if you plan to file bankruptcy and shut down your business:

1. If you lease space and are behind on the rent and do not have Quickbooks on the cloud, back up your computers to a location off site each night or take your computer home each night. If the landlord locks you out, you will not have access to your computer if it is on the premises.

2. Don’t sell the bank’s collateral without their permission in writing. The creditor will object that their debt should not be dischargeable.

3. Don’t transfer business assets for less than fair market value before filing bankruptcy – especially to yourself or another business in which you or family members have an interest. Consult with an attorney if you have someone who wants to buy the business assets.

4. Don’t repay yourself, family member, officers or directors for loans made to the company without consulting with an attorney.

5. Don’t pay vendors or other business creditors less than 90 days before you plan to file bankruptcy without consulting with an attorney.

6. Don’t pay yourself back wages or draws without consulting with an attorney. Continuing to take your regular paychecks is generally okay but taking back pay is not.

7. Don’t give a creditor of the business a lien to secure a preexisting debt of the business within 90 days prior to filing bankruptcy.

8. Be careful to follow the terms of any business agreement with partners or other members if you decide to exit the business – especially if your partners or other members don’t want you to exit. Your poor abandoned partners will claim breach of fiduciary duty and that the company would have been the next Apple if only you hadn’t breached.