Business Debts Can You Be Held Personally Liable?

 If you own a small business that is struggling financially, perhaps you’re asking yourself if business creditors can come after you personally. Sales may be down. Your customers may not be paying you on time if at all. Capital may be limited to keep up with the growing business expenses. These things often cause serious cash flow problems and can lead to business insolvency.
Regardless of the type of business structure you have (sole proprietorship, LLC, partnership or corporation), you may be held personally liable for your company’s financial obligations if they are not paid. If you’re a sole proprietor, you are directly liable to creditors because you are the business. If you are an LLC or corporation, legally, you should not be – unless you have personally guaranteed the debts of the business.
Unfortunately, this is unavoidable for small business owners because it is common for landlords or company creditors to ask for a signed personal guarantee before doing business with you. If you are in a partnership, your liability depends on whether you are a limited or general partner. General partners are liable for partnership debts while limited partners are not.
Even if you’ve already decided to close your business, remember that there they may still be personal liability issues that need to be addressed including unpaid payroll taxes (The IRS can under certain circumstances hold business owners personally liable). If you’re unsure about where you stand, you need to consult with a bankruptcy attorney who can carefully evaluate your case.
Ray J. Bulaon is a bankruptcy and debt relief attorney in Valencia who has helped more than 6,000 clients get out of debt. Call his office at 866-477-7772 or 661-775-4880 for additional information.