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.


Asked on 3/06/00, 3:01 pm

1 Answer from Attorneys
Ronald Cappuccio Ronald J. Cappuccio, J.D., LL.M.(Tax)

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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Answered on 3/22/00, 10:16 pm


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