But what about the sole traders?

But what about the sole traders?

October 2, 2012 by raydale

If you’re a director of a limited company, there is a degree of separation that protects your personal assets from getting caught up in the liquidation process, should your business enter into an insolvent procedure.  But what about sole traders?

For a sole trader or self-employed person, personal and business finances are often thrown into the same pot with personal credit cards and overdraft facilities being used to prop up a struggling business.  Things can get out of control quickly at this point.

Many sole traders believe that bankruptcy is the only avenue open to them and are unaware that they could qualify for an Individual Voluntary Arrangement (IVA).   The great advantage an IVA has over a bankruptcy for a sole trader is the ability to carry on trading whilst in the IVA, which is not always the case with a bankruptcy.   In addition, if you own your own home, an IVA offers the space to formulate a plan to deal with assets, including the matrimonial home, in a more controlled fashion.

If your sole trader or partnership business needs some breathing space to explore options, a Partnership Administration or Partnership Voluntary Arrangement may also be suitable.  These processes are used to ring fence the business, effectively protecting it from creditors and legal action for up to three months so that issues can be examined and solutions found.

Filed Under: Sole Traders

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