Business bankruptcy

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Replied by FrankN on topic Business bankruptcy

I am in process of starting an LLC in Georgia. It is relatively easy to do with a few forms to fill out and all-in fees are less than $200.
1 year 4 months ago #1

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Replied by FrankN on topic Business bankruptcy

JGibbs wrote:

Lexie wrote: Opening a business with no startup fee is a wonderful thing. We did this several years ago online and sold products through a 3rd party. We did incorporated just in case. Our S-corporation has worked very well as it has protected our personal assets. We have had no issues but it is good to know we have taken precautions to protect ourselves.

Why did you choose to incorporate instead of filing for an LLC? I can't figure out how anyone could start a business without a startup fee. Doesn't filing for incorporation count as a fee? Did a lawyer look it over? If so, that would need to count too. What about the products that you sold, did you buy them? Don't forget to pay for shipping as well. Even the most rudimentary business would require basic advertising even if it's just hanging flyers in the targeted area. I would love to do this too if possible. What am I missing?


S-Corporations can have certain protections and if you plan to expand to more than 100 shareholders, it is the route to go over LLCs. Fees are relatively low to incorporate, depending on the state, and is usually less than $500 all-in.
1 year 9 months ago #2

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Replied by JGibbs on topic Business bankruptcy

Lexie, I hope my last post came out right. I'm trying to learn more about setting up a business and the costs involved. I'm attempting to talk a relative out of joining an MLM. It's desirable to her because of the low starting fees. It's still a foolish idea since 99.5% of participants end up losing money. I think it's amazing that you've done well.
1 year 10 months ago #3

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Replied by JGibbs on topic Business bankruptcy

Lexie wrote: Opening a business with no startup fee is a wonderful thing. We did this several years ago online and sold products through a 3rd party. We did incorporated just in case. Our S-corporation has worked very well as it has protected our personal assets. We have had no issues but it is good to know we have taken precautions to protect ourselves.

Why did you choose to incorporate instead of filing for an LLC? I can't figure out how anyone could start a business without a startup fee. Doesn't filing for incorporation count as a fee? Did a lawyer look it over? If so, that would need to count too. What about the products that you sold, did you buy them? Don't forget to pay for shipping as well. Even the most rudimentary business would require basic advertising even if it's just hanging flyers in the targeted area. I would love to do this too if possible. What am I missing?
1 year 10 months ago #4

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Replied by FrankN on topic Business bankruptcy

Lexie wrote: Opening a business with no startup fee is a wonderful thing. We did this several years ago online and sold products through a 3rd party. We did incorporated just in case. Our S-corporation has worked very well as it has protected our personal assets. We have had no issues but it is good to know we have taken precautions to protect ourselves.


Best way to keep control of your business is not take an investment or loan from anyone else!
1 year 10 months ago #5

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Replied by Lexie on topic Business bankruptcy

Opening a business with no startup fee is a wonderful thing. We did this several years ago online and sold products through a 3rd party. We did incorporated just in case. Our S-corporation has worked very well as it has protected our personal assets. We have had no issues but it is good to know we have taken precautions to protect ourselves.
1 year 11 months ago #6

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Replied by FrankN on topic Business bankruptcy

Joker wrote: Setting up your business as an S-Corp or LLC will limit your liability, however, if you willingly leverage your personal assets for a business loan and sign a personal guarantee, you give up your rights to keep the business and your personal assets separate. They will come after your personal assets if you sign that type of agreement.


Right, but I would say for a new business venture / startup with no cash flow, a traditional bank will only give you a loan if you sign a personal guarantee. Otherwise its very unlikely you would get a loan from a traditional bank
1 year 11 months ago #7

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Replied by Joker on topic Business bankruptcy

Setting up your business as an S-Corp or LLC will limit your liability, however, if you willingly leverage your personal assets for a business loan and sign a personal guarantee, you give up your rights to keep the business and your personal assets separate. They will come after your personal assets if you sign that type of agreement.
1 year 11 months ago #8

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Replied by FrankN on topic Business bankruptcy

Agreed. If its a new business with no existing cashflow, almost all banks will require a personal guarantee.
2 years 4 months ago #9

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Replied by Wanderer on topic Business bankruptcy

Something to remember, many credit lenders will look at your personal credit report and may tie your loans back to your personal assets as a security. Another words, ask questions related to how they would handle security for the loan.
2 years 5 months ago #10

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Replied by FrankN on topic Business bankruptcy

It is definitely one of the most important aspects in initially setting up a business.
2 years 6 months ago #11

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Replied by FrugalFran on topic Business bankruptcy

Good information! I hadn't thought about using personal assets to secure a business loan, but I can see that would be something to consider as far as liability. Of course, I don't think anyone ever wants to think about defaulting on a loan, business or otherwise, but it's important to have all bases covered.
2 years 6 months ago #12

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Replied by FrankN on topic Business bankruptcy

The Legal structures of a business corporation or LLC limits the owner's personal liabilities. However if your business is structured as a sole proprietorship, you have unlimited liability and people can go after your personal assets.
2 years 6 months ago #13

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Replied by Goldbug on topic Business bankruptcy

If the business is a corporation then personal assets are normally protected. However personal assets are not protected if a person took out a loan secured on them for the business, or used them as collateral for business expenses or deals. If that happens, whatever the loan was secured on can be taken and used to pay creditors.
2 years 7 months ago #14

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Replied by FrugalFran on topic Business bankruptcy

Moneyes wrote: Personal finances have nothing to do with a business bankruptcy. The bankruptcy court appoints a trustee to, among other things, liquidate the assets of the company in order to pay off the debts of the business.


Interesting - thanks for that, Moneyes. So, basically, if the business was something like a retail store, the inventory and various other items located on the property would be sold or auctioned and the lenders would get the money from it. Does that allow the business owner to walk away once all is said and done without any repercussions?
2 years 7 months ago #15

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