If you own a business and are filing (or considering) personal bankruptcy, you may be wondering:

Does my business need to file too?

The answer depends on your business structure, debt exposure, and whether the company is still viable.

Step One: What Type of Business Do You Have?

Sole Proprietor

If you operate as a sole proprietor:

• You and the business are legally the same.
• Business debts are personal debts.
• Business assets are personal assets.

If you file personal bankruptcy, your business is automatically included.

There is no separate “business bankruptcy” needed.

LLC or Corporation

If your business is an LLC or corporation:

• It is legally separate from you.
• The company’s debts belong to the company.
• Your personal debts are separate — unless you signed personal guarantees.

In this case, the business may need its own bankruptcy filing if:

• It has significant unpaid vendor debt.
• It has secured loans in default.
• It is facing lawsuits.
• It cannot operate profitably.

When the Business Should File Bankruptcy

A business filing may make sense if:

• The company is insolvent.
• There is no realistic path to profitability.
• Creditors are suing the company.
• There are significant secured assets at risk.
• You want an orderly wind-down.

An LLC or corporation may file:

• Chapter 7 (liquidation)
• Chapter 11 (reorganization)

Note: Businesses cannot file Chapter 13.

When Only You Should File

Often, only the individual needs to file bankruptcy when:

• The business is already closed.
• The business has no assets.
• The primary issue is personal guarantees.
• The business remains profitable.

In those cases, personal bankruptcy may eliminate your guarantee liability while allowing the company to continue operating.

The Key Question

Is the business worth saving?

If yes, strategy matters.
If no, an orderly liquidation may be cleaner.

Evaluating both personal and business exposure together is critical.