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I am self employed – How can I save my failing business?

If your own business gets into financial trouble you could be personally responsible for the outstanding debt and your home may be at risk. However, personal financial disaster can be avoided if the correct actions are taken.

Running a non limited company business means that you are classed as self employed. You could be a sole trader working on your own or employ a number of staff members.

You could also be using a trading name which is different to your own. However, in a legal sense, you and the business are still one and the same.

Because you and your business are the same legal entity, you are personally responsible for any debts that you incur in its running. Even if you take an overdraft or loan under the business’ trading name, you must repay the debt personally if your business gets into trouble and is unable to do so.

Personal debt solutions can be used to turn the business around

By using a personal debt solution, you could give your business a new lease of life if you believe that it could trade profitably without the burden of the debts which have been built up.

Self employed business debts can be resolved using a debt management plan (DMP), individual voluntary arrangement (IVA) or even bankruptcy. And there is no reason that you cannot continue to run your business even if you are bankrupt.

The solution that you choose will depend very much on your personal situation, whether you are a home owner and whether you feel your business can continue to trade profitably in the future.

Each of the personal debt solutions will reduce the amount you pay to your creditors each month which will make ongoing trading easier. The options of IVA and bankruptcy will also lead to debt being written off which is of course a major advantage.

Business Banking is the major hurdle

The major problem to overcome when dealing with self employed business debt is your business banking facilities. If your business owes money to its bank and you implement a debt solution, you will almost certainly need to move your account.

Even if your business bank account has no debts but you have a personal account and debt with the same bank, it is likely that you will have to close both your business and personal accounts.

Opening a new bank account for your business is not necessarily an issue. However, you will not be offered credit facilities such as an overdraft or credit card. If you want to maintain a particular line of credit such as a credit card, this may be possible using a debt management plan. However this would need careful planning and is not necessarily advisable.

If you are self employed and your business gets into financial trouble, you are personally responsible for the business debt. However, you can often save the business and turn things around using a debt solution such as DMP, IVA or bankruptcy.

However, as always, the key to saving your business will be taking prompt action. If you feel that your business has financial problems, you should take expert advice as soon as possible. Such advice will very often lead to a solution which will allow you to continue trading successfully in the future.

If your business is in financial difficulty why not talk to us about solutions, more info at http://coopermatthews.com/personal-debt.html

Derek Cooper is Managing Director of Cooper Matthews Limited and a member of the Turnaround Management Association UK.

Cooper Matthews specialise in Business Recovery Services Advice providing straight forward insolvency advice for businesses in difficulty and business owners with personal financial problems. They have significant experience in working with small to medium sized businesses, working with Directors, Sole Traders and Self Employed.

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