Struggling With Your Small Business? Let’s Talk About Your Options.

If you are the owner of a small business that has fallen on tough financial times, given the current economic downturn, you are certainly not alone. This doesn’t make it any easier. Furthermore, chances are the financial problems of the business are likely also creating financial problems for you personally. This is often a consequence of financial distress regardless of whether your business is incorporated or whether you operate as a sole proprietorship.

If your business is incorporated, then it is a separate legal entity with its own assets and debts (i.e. creditors) which are separate from your personal assets and debts. If you are not personally liable for any of the corporation’s debts, then you may be able to restructure the corporation’s debts through a Proposal to its creditors or by assigning the corporation into bankruptcy. The good news is, these processes would not have any negative impact on your personal financial situation or credit record. That being said, lack of personal liability is not often the case as usually the owner has personally guaranteed certain debts of the corporation, such as the corporation’s bank loan; and / or is personally liable as a Director for amounts the corporation owes to governmental authorities, such as arrears for GST, PST, HST, payroll deductions and / or Workers’ Compensation.

If your business is not incorporated, then you and your business represent one and the same legal entity and all of the business’ assets and debts and all personal assets and debts are your own. The effect of being the same legal entity, is that your “business” creditors can pursue your personal assets and your personal creditors can pursue your business assets. As a result, the filing of a Proposal to creditors or a bankruptcy assignment would encompass both the assets and the creditors of you and your business.

There is no question that a business insolvency, whether corporate or sole proprietorship or partnership, is much more complex than a personal insolvency. Obviously, when your business is faltering, you want to know your options as soon as possible so you can choose the best course of action.

As such, scheduling an initial confidential consultation with one of our Government Licensed Professionals is an excellent first step for you to obtain a clear and complete understanding of your options. You are welcome to bring your professional advisors with you (i.e. accountants and / or lawyers) to ensure a clear understanding is communicated. Often there are several options to save the business, however the longer someone waits, the lesser the chances are that some options will still be available. We will help you overcome the challenges you face by developing strategies that meet the expectations of all stakeholders that are aligned with your objectives.