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    Robert and the team at Stiberman Law are truly exceptional. I was faced with the daunting task of navigating bankruptcy, and from the moment I contacted them, I knew I was in good hands Read More
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    Excellent Lawyer, friendly and on top of things and reliable and efficient. I had to go through bankruptcy twice and I trusted them every time. I had the best experience with Robert and Read More
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    I am very satisfied with the service that they offered us. They were very professional and kept us informed at all times. I was looking for a bankruptcy attorney nearby and fount Robert Read More
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  • Louisa P.starstarstarstarstar5.0
    Robert and the team at Stiberman Law are truly exceptional. I was faced with the daunting task of navigating bankruptcy, and from the moment I contacted them, I knew I was in good hands Read More
    May 21, 2024logo
  • Arlene S.starstarstarstarstar5.0
    Excellent Lawyer, friendly and on top of things and reliable and efficient. I had to go through bankruptcy twice and I trusted them every time. I had the best experience with Robert and Read More
    March 20, 2024logo
  • Gustavo S.starstarstarstarstar5.0
    I am very satisfied with the service that they offered us. They were very professional and kept us informed at all times. I was looking for a bankruptcy attorney nearby and fount Robert Read More
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  • Paul B.starstarstarstarstar5.0
    I would like to share the amazing experience I have had with this Law firm. I was on the verge of loosing my house because I had not paid my property taxes. I looked for a Bankruptcy at Read More
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    When I say this office was absolutely the best, I am not kidding! They have been absolutely phenomenal. Robert has been the best bankruptcy attorney. The whole team has always kept Read More
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    I was referred by a friend to this bankruptcy attorney. Mr. Stiberman and his staff was very courteous, knowledgeable and very caring towards my concerns. I am pleased with the outcom Read More
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    The process was relatively easy, I would recommend Stiberman Law to anyone who finds themselves in need of a bankruptcy attorney.
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    I have to say that I have had a great experience with Stiberman Law regarding a bankruptcy and they have been very informative and supportive. They have been very helpful and always ans Read More
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  • L.L.starstarstarstarstar5.0
    Excellent service. Great bankruptcy attorney and staff. Always informed me of what to expect. My Chapter 13 bankruptcy was smooth and the process was easy thanks to Robert and the Read More
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  • Sam Sstarstarstarstarstar5.0
    Twelve years ago I was in need of legal representation stemming from the housing meltdown if 2008. Robert Stiberman and his staff handled the matter with complete professionalism and sp Read More
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    I was looking for a bankruptcy attorney in Miami, and I found Mr. Stiberman. He and his office were efficient, and they guided me through every step of the process. I am appreciative of Read More
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  • Carmen C.starstarstarstarstar5.0
    I am so grateful for Stiberman Law, P.A. In 2019 my husband and were faced with a very difficult decision file for Bankruptcy, unfortunately we weren’t able to pay for our credit Read More
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  • N.M.starstarstarstarstar5.0
    Excellent work from this bankruptcy law firm! I was drowning in debt with my license suspended from a lawsuit I had and thought I would have to spend the rest of my life paying back deb Read More
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    The experience with this office has been great. No problems at all they have kept me straight to doing the right thing and feeling a breeze of peace and being debt free with my bankruptcy.
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    Very happy with Robert and his team. Thanks to them we were able to save our home. Very helpful and knowledgeable in bankruptcy. Best attorney.
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    I had a great experience, I just want thank Stiberman law and his team for a great experience also Ana for the help and explaining my case. Appreciate, thank you
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    Very good office with my bankruptcy. They have been amazing through this hard process. Very happy with Robert and his staff they are very nice and professional. Thank you stiberman!
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    Amazing work by Robert. They are really good with what they do, very attentive and knowledgeable. Customer service and professionalism are top, the lawyer has been great this whole t Read More
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Understanding Self-Employment Income and Bankruptcy for Business Owners

Understanding Self-Employment Income

What is Self-Employment?

Self-employment refers to individuals who work for themselves, often as freelancers, contractors, or sole proprietors, rather than employees for another person or business. They are responsible for finding clients, completing projects, and managing their taxes and finances.

Types of Self-Employment Income

Self-employed individuals can earn income through various sources, including but not limited to:

  • Service fees or commissions
  • Product sales
  • Consulting fees
  • Royalties from intellectual property
  • Rental income

Self-Employment Income as Business Income

Why is Self-Employment Income is Considered Business Income

Self-employment income is generally considered business income because it is generated through a person’s trade or business activities. This classification is important, as it has tax and financial implications that differ from those of a traditional employee.

Tax Implications of Self-Employment

Self-employed individuals are subject to different tax requirements compared to employees. They must pay the employer and employee portions of Social Security and Medicare taxes, known as self-employment tax. Additionally, they are responsible for reporting their business income and expenses on their individual tax return, usually on Schedule C.

Bankruptcy and Self-Employed Individuals

Types of Bankruptcy for Self-Employed Individuals

There are two common types of bankruptcy that self-employed individuals may consider:

  1. Chapter 7 Bankruptcy – Also known as “liquidation” bankruptcy, this type of bankruptcy involves the sale of non-exempt assets to pay off debts. Individuals with limited income and assets typically use it.
  2. Chapter 13 Bankruptcy – This type of bankruptcy allows individuals with a regular income to create a repayment plan to pay off their debts over three to five years.

How Bankruptcy Affects Your Business

Chapter 7 Bankruptcy

In a Chapter 7 bankruptcy, the court-appointed trustee may sell non-exempt business assets to pay creditors. This could result in the liquidation of your business. However, if your business has little or no assets, it may be possible to continue operating after bankruptcy.

Chapter 13 Bankruptcy

Under Chapter 13 bankruptcy, self-employed individuals can continue running their businesses while repaying their debts through a court-approved plan. This option provides more flexibility and allows the debtor to retain their business assets. It is important to note that your business’s valuation will be considered in determining how much your unsecured creditors are paid throughout the bankruptcy.

Preparing for Bankruptcy

Organizing Financial Records

Before filing for bankruptcy, gathering and organizing your financial records is essential. This includes income statements, bank statements, tax returns, and assets and liabilities. Understanding your financial situation will help you and your attorney determine the best course of action for your bankruptcy case.

Consulting a Bankruptcy Attorney

Bankruptcy laws can be complex, and navigating the process as a self-employed individual may be challenging. It is highly recommended to consult with an experienced bankruptcy attorney who can advise you on your options and help you make an informed decision. They can also guide you through filing and ensure you comply with all legal requirements.

Conclusion

In summary, money earned from self-employment is considered business income, which can have various tax and financial implications. When it comes to bankruptcy, self-employed individuals can file for Chapter 7 or Chapter 13 bankruptcy, depending on their financial situation and the nature of their business. Organizing financial records and consulting with a bankruptcy attorney is crucial to determine the best course of action for your unique circumstances.

Frequently Asked Questions (FAQs)

1. How do I know if I’m considered self-employed?

You are considered self-employed if you work for yourself and not as an employee of another person or company. Examples of self-employment include freelancing, consulting, and running a sole proprietorship.

2. How does self-employment income affect my taxes?

Self-employment income is subject to self-employment tax, which covers the employer and employee portions of Social Security and Medicare taxes. You are also responsible for reporting your business income and expenses on your individual tax return, typically on Schedule C.

3. Can I continue running my business during bankruptcy?

Under Chapter 13 bankruptcy, you can continue operating your business while repaying your debts through a court-approved plan. In a Chapter 7 bankruptcy, the outcome depends on the value of your business assets and whether they need to be sold to pay off debts.

4. Do I need a bankruptcy attorney if I am self-employed?

While it is not legally required to have an attorney, consulting with an experienced bankruptcy attorney is strongly recommended, as bankruptcy laws can be complex, and the process may be challenging for self-employed individuals.

5. How long will bankruptcy remain on my credit report?

Chapter 7 bankruptcy typically stays on your credit report for ten years, while Chapter 13 remains on your report for seven years. This can impact your ability to obtain credit or loans in the future.

Robert Stiberman is a bankruptcy attorney with extensive experience representing self-employed individuals. He has represented numerous clients in bankruptcy cases and can offer advice in a bankruptcy audit. With his knowledge and expertise, Robert Stiberman can provide his clients with the guidance and representation they need to navigate bankruptcy successfully.

Written By:

Attorney Robert Stiberman

Robert is an experienced bankruptcy attorney adept at handling Chapter 7, 13, and 11 filings, with more than 15 years of experience in bankruptcy cases. Robert represents clients in both consumer and business bankruptcy ... Read More

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