Legal Question in Business Law in New Jersey
small business failure and personal risks
In general, if I were to start a small business, (daycare center), and the business failed within the first year of start-up, I heard that the business could be considered a tax write off. If this is true, would this clear me of any financial responsibility of the business, if I can write it off, (business expense owed, property rental or mortgage, etc.) If my business were to close within the 1st year of opening, what would I be financially responsible for? What about if the business failed after being opened for greater than 1 year? Your response is appreciated.
1 Answer from Attorneys
Re: small business failure and personal risks
First, the business should be set-up as a Limited Liability Company. That will help you limit liability to the maximum extent and still get the tax write-offs. Nevertheless, most creditors, landlords, and suppliers will probably demand that you sign personally for the obligations.
To help you choose the best form for your business, go to http://www.taxesq.com/choice.html.
Ronald J. Cappuccio, J.D., LL.M.(Tax)
Counsellor at Law
(856) 665-2121
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