Answer: They can start a business at anytime, even if bankrupt, the only restriction is they cannot be a Director of a LTD company until discharged.
Also, as a bankrupt, and even after discharge, they may find it very difficult to open a business bank account.
This article form our web site may shed some more light on this for you as well:
Can I Run My Own Business If I Have Been Bankrupt?
It seems that even with the economy still not at 100%, hey is it ever at 100%, people want to be there own boss and still have the dream of owning their own business.
With that dream comes the question I hear quite a bit: can I have my own business if I was bankrupt, or can I have my own company if I am in bankruptcy??
The short answer to this is yes, you can have your own business, you can be self-employed.
The only restriction while you are in bankruptcy is hat you cannot be the Director of a Limited Company; and even that has an exception which I discussed previously. That exception being you do not directly handle the company’s finances and the Official Receiver approves this.
But, for most people, yes, you can run your own business as a sole-trader or a partnership.
Interesting side-note, and not to put people off to being self-employed, but one of the large reasons that people find themselves insolvent and bankrupt is due to having their own business and it not being profitable.
Having your own business, while a dream for many, can be a nightmare.
It is a lot of hard work, period!
For some businesses it can be years before they are profitable and start being in a position to pay salaries to the owner(s).
So wanting to have your own business is great, but you need a good business plan to start, and a good product or service.
One thing we do see a lot of is people who have put their life savings into a business, and use credit cards and other personal credit lines to keep the business going, and then when it becomes apparent the business is not going to work, they are on the hook for all the debts and find themselves bankrupt.
So not to rain on anyone’s parade or smash someone’s dream, just be aware of the risks in opening your own business.
And you can have your own business either while you are bankrupt, or after bankruptcy.
So while being bankrupt does not stop you from being self-employed, one concern you may face is the opening of a business bank account.
Many banks will not allow someone who is or was bankrupt, to open a business bank account; which can make it difficult in sorting out the business’s finances from your personal finances. Of course if you are a sole-trader then it may seem as though they are all the same, but in keeping the company’s books, having a separate account is helpful.
Another question I get is can I be a self-employed taxi driver, or work as a contractor being self-employed but under a larger company; the answer to this is also yes.
As long as the company you will be working under has no issue with you being or having gone bankrupt, it is not a problem.
One other question I get is about tools needed to be self-employed, or if someone is self-employed, maybe has a small shop and has stock in it, will my tools or stock be taken for the bankruptcy.
Usually, no tools and things of this nature related to the business would not be taken. I say/write usually as there may be some circumstances where the business is closing or whatever and the stock can be used to offset any losses in bankruptcy.
But tools of the trade, and things needed for you to continue your lively hood are allowed. This also means vehicles that may be used if you are a taxi driver or need a van for your business, etc.
So now that we know bankruptcy does not exclude us from being self-employed and chasing the dream of being our own boss, let’s all open shops and services to bring the economy back to where it needs to be!