{"id":4651,"date":"2016-04-04T10:47:37","date_gmt":"2016-04-04T15:47:37","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/closing-a-business\/managing-a-business-in-financial-distress-prior-to-closing.html"},"modified":"2024-05-23T00:54:27","modified_gmt":"2024-05-23T05:54:27","slug":"managing-a-business-in-financial-distress-prior-to-closing","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/closing-a-business\/managing-a-business-in-financial-distress-prior-to-closing.html","title":{"rendered":"Managing a Business in Financial Distress Prior to Closing"},"content":{"rendered":"\n
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Managing a Business in Financial Distress Prior to Closing<\/h1>\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Aviana Cooper, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Cash flow is your No. 1 priority if you own a small business. Any interruption in your cash flow may be a sign of financial distress. If your business is having financial issues, there may be a temptation to shut down to avoid any personal liability. Even if you set your business up to avoid personal liability<\/a>, you may be on the hook for taxes or lawsuits.<\/p>\r\n

Dissolving your business because of financial stress may be an option, but don’t let your emotions run away with you. Take time to get legal advice about other options before rushing into dissolution.<\/p>\r\n

Your business plan should address possible financial challenges. However, some challenges, such as the COVID-19 pandemic, are unforeseeable. If your business is in trouble, here are some tips for handling financial distress, avoiding liability, and protecting your business assets in case you must shut down.<\/a><\/p>\r\n

Managing Financial Stress<\/h2>\r\n

Your debts will not vanish if you shut down your business. Creditors, vendors, and employees can still sue for breach of contract or unpaid bank loans. Take the time to audit your books and review state laws regarding employee and creditor notification when your business is in trouble.<\/p>\r\n