When you’re self-employed, you may feel more burdens on your shoulders than those with the traditional nine-to-five. Not only are you trying to keep a successful business going, but you rely on that income to support yourself and your family. But when tragedy strikes in the form of business losses or even a health or family event, you may have no choice but to file for bankruptcy while self-employed. But how do self-employment and bankruptcy work in Ohio? The Jones Law Firm has the answers.
The Ohio Means Test for bankruptcy is important for anyone looking to file, however, if you are self-employed, it becomes critical to your eligibility.
This will become a true testament to your bookkeeping as not only will you need to be aware of your monthly income and expenses, but, if one month is the difference between the median income, you will need to be able to backtrack expenses and income to see what deductions may be missing, if any.
Depending on your income and expenses will determine if you qualify for Chapter 7 or Chapter 13 bankruptcy. You can learn more about the process of determining your eligibility as a self-employed Ohioan under the means test in our blog, here.
The key difference when filing for bankruptcy when you are self-employed is the ease in which you can prove your income. As a self-employed individual or an independent contractor, you have to track all of your income, taxes, and deductions to an exact whereas if you were employed by someone else, you could simply look to your W2.
However, if you are an independent contractor, you will have to either submit your 1099 form and expenses to prove your income or keep track of your taxes and deductions you have made on your own.
If you own a business though, the process is further complicated. In addition to your inventory, sales, income, and expenses, you will need to use documentation to back up your record keeping.
This may include bank statements that show deposits of cash, checks, receipts, etc. which will prove you have been paid. You will need to provide as many documents as possible to ensure your bankruptcy process goes as smoothly as possible.
Determining whether Chapter 7 or Chapter 13 bankruptcy is best for you as a self-employed Ohioan is largely dependent on your income as well as debts.
Chapter 7 bankruptcy is an attractive opinion for many business owners looking to file for bankruptcy because most consumer and business debts will be resolved. In addition, because Chapter 7 bankruptcy is over in only months, you will be able to rebuild credit quickly while also keeping some of your assets.
If you do not qualify for Chapter 7, you likely will qualify for Chapter 13 bankruptcy. Under this form of Ohio bankruptcy, you will be able to repay some or all of your debt over a three to five year period without losing your assets. In addition, you will likely be able to consolidate your payments to avoid fees and further financial issues.
You may shoulder most, if not all, of the burden of being self-employed. But you need advice when it comes to filing for bankruptcy.
If you are experiencing financial distress, we encourage you to contact The Jones Law Firm for a free consultation about how we can help you and your business move forward. With our office located in Reynoldsburg, Ohio, The Jones Law Firm works with clients in and around Columbus and throughout central Ohio. Don’t delay. Your financial future begins now.