Small Business Losses and Filing for Bankruptcy
Small businesses in South Florida can be extremely rewarding for business owners to run, but they can also be stressful enterprises when the business is losing money for reasons related either to the business itself or to external factors. There are a wide range of small businesses throughout the West Palm Beach area, and many are able to maintain a net profit, yet others do struggle. Given that South Florida is particularly busy during the fall and winter months when snowbirds are in the state, businesses can often determine whether they need to consider other financial options — including bankruptcy — if they continue to see business losses during this time of the year.
Why do small businesses lose money? And when they do lose enough money that bankruptcy becomes a strong option, what types of bankruptcy may be available? Consider some of the following information from our West Palm Beach bankruptcy lawyers.
Why Do Most Small Businesses Lose Money?
There are many different reasons that a small business can lose money, and these factors may be within or entirely outside control of the business owner or owners. According to an article in Forbes, the following are some of the most common reasons that small businesses lose money:
- Inaccurate accounting, which can make it difficult to know with certainty how much money your business actually has to pay creditors and employees at any given time;
- Mixing personal bank accounts or money with business bank accounts or money;
- Pricing products or services poorly based on the market and in relation to competitors;
- Failing to invest money into the business and to grow the business; and
- Limited or lack of existence online.
These are just general and broad reasons that businesses struggle financially, and there are often reasons that are specific to the industry of the business and to the specific circumstances of the particular business.
Bankruptcy Options for Small Businesses
Depending upon the type of small business you have, how the business is structured, and the amount of debt the business has, you may have multiple options for a small business bankruptcy filing. The following can be potential options for business bankruptcy in South Florida:
- Chapter 7 bankruptcy (usually available for all types of businesses, but requires closing the business since it is a liquidation bankruptcy);
- Chapter 11 bankruptcy (a reorganization bankruptcy available to most businesses); and
- Subchapter V bankruptcy (a type of Chapter 11 that is more streamlined and less complicated and costly, and available to small businesses with limited debt).
In limited circumstances, a sole proprietorship can qualify for Chapter 13 bankruptcy, and small businesses that focus on fishing or farming can qualify for Chapter 12 bankruptcy.
Contact Our West Palm Beach Bankruptcy Attorneys Today
Knowing when and how to file for small business bankruptcy can be complicated, especially if you want to file for a type of reorganization bankruptcy and do not fully understand your eligibility for the various types of reorganization bankruptcy available to businesses under the US Bankruptcy Code. Yet an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can begin working with you today. We can answer any questions you have, and we can provide clarity about your business’s eligibility for Subchapter V and other types of small business bankruptcies. Contact us today to get started and to learn more.