0019 - Debt Related Queston: Bankruptcy Question # 0019

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QUESTION #0019:

My business isn’t making as much money as I had expected, and I have had to use my personal credit to cover expenses, like wages and supply costs. My personal debt seems to be growing faster than my business can pay me. What can I do?

This is a big question. I’ll start with how to track real profit on a sole-proprietorship business (not incorporated). The financial records need to be accurate and complete, and it is recommended that separate bank accounts and credit be established. Deposit ALL revenue to the business account and then use for business expenses ONLY. Check with your tax accountant or Canada Revenue as to what are deductible expenses. Pay yourself a set amount, and deposit this into your personal account, then pay your personal expenses from there. This gives you an accurate record of what is business, and what is personal. If the business account is regularly going into overdraft, or expenses simply aren’t paid, this should be your red flag that the business itself needs to be examined and restructured, or shut down.