Farm Business Failed
if a person owned a farm and then built a business as a sole proprietor with money from the farm and then the business failed, if bankruptcy were declared would the person be required to declare personal or corporate bankruptcy? would assets such as land owned be seized and be used to fulfill the bankruptcy.
Should a person be starting a business as a limited corporation instead of a sole proprietor?
Posted from: Alberta
This is a topic that depends on a number of things. Firstly there is no right or wrong way to start a business, certain businesses may be better to incorporate, some may not. Either way, even if you incorporate you aren’t entirely free from any risk as many debts that relate to the business you could still be personally responsible for.
As for a bankruptcy, as a sole proprietorship is not a separate legal entity you would have to file bankruptcy personally. Now this may or may not cause you problems with the farm assets. If you employed full time on the farm (i.e. it is your principle source of employment) then there are a variety of exemptions that are available (i.e. home quarter and all the equipment necessary for the operation of the farm are considered exempt).
Realistically, when dealing with a farm you are best to simply contact a local trustee directly as there are many aspects of the farm that must be considered.