business bankruptcy question

[theken]

Does anybody know if you start a business have business loans and what not if it goes belly up does it effect your personal credit and finances. Any help would be appreciated

[dr_jared88]

depends if its a sole proprietorship or if its incorporated.

[theken]

So incorporate your business to protect your assets

[dr_jared88]

well yes.. sorta. it depends what you are doing. Corporations cost more money to operate and have waaaay more paperwork to be done every year. But benefits are that you aren't tied with the company and instead own shares in the company. That way if you get sued they generally can't sue you and come after your personal goods.

But it really depends on the business as to whether incorporating is the way to go or not.

[canuckcarguy]

Most banks / lenders won't lend a new business any money without personal guarantees, so even incorporation won't help you if you, as an individual, co-sign or guarantee the loan. Sometimes they'll let you away with a partial guarantee or a time-limited guarantee, but often their perspective is that if you're not going to put your ass on the line for your business, why should they? Unless you have a business with established track record and some assets, you're unlikely to secure any significant financing.

Also be aware that if you're running a business and fall behind to revenue Canada regarding trust accounts (ie, GST and payroll), you can be held personally responsible for these accounts plus interest and penalties as a director, even if you're incorporated.

[theken]

What if your business is based overseas

[The Cosworth]

^^ what country is the company based out of, that may help

[theken]

It will be servers based in costa rica. I would still be paying taxes here but the only employee would be myself

[canuckcarguy]

Not sure where you've looked for financing, but I'd say being based in Costa Rica makes it even tougher to borrow money, especially if you're borrowing the money locally.

[broken_legs]

what kind of snuff/child porn are you hosting that you need to go to costa rica?

[TomcoPDR]

Originally posted by broken_legs
what kind of snuff/child porn are you hosting that you need to go to costa rica?

:rofl: damn it, you beat it to it. My second guess would be online gambling.

[theken]

;) thats right tomco