If your business has been in the red for a while, and you cannot pay off your business debts, your creditors may start looking for money. They can do this by threatening legal action against you or your business. For these reasons and more, it is critical to consult with an experienced business attorney.
Below are some business organization models that may help protect you and your business:
Create General Partnerships or Sole Proprietorships
- Sole proprietorship: In this scenario, you and your business are the same entity, meaning that you are personally responsible for your business debts. Creditors and others that have a claim for money against your business will be able to reach your personal assets in order to satisfy these obligations.
- General partnership: In a general partnership, you and every other general partner can be held personally liable for all of the business debts of the partnership. If the business does not have enough capital to satisfy its debts, the creditors can turn to you or any of the other general partners and seize personal assets to satisfy debts.
Create Limited Liability Companies and Corporations
- Limited Liability Corporation (LLC) or a Corporation: If your business was organized as an LLC or corporation, more than likely your personal assets are protected from creditors and others making claims about your business. However, it is possible that at some point you may have given up your personal asset protection without realizing it. By signing away your limited liability that comes from LLCs and corporations, you make yourself personally liable for the business debts of your organization.
Structuring your business wisely, and collecting unpaid debts from customers is essential to the success of any business. Texas attorney Andrew Weisblatt is a skilled Houston B2B business collections attorney who understands how to effectively collect from businesses that may be reluctant or unable to pay their outstanding financial obligations. To schedule an appointment with Mr. Weisblatt, call our Houston office today at 713-666-1981.