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The United States has witnessed a significant surge in corporate bankruptcies, reaching a 14-year high in 2024. Businessbankruptcy filings increased by 33.5% In contrast, customer bankruptcies or other defaults typically cause the loss of most, if not all, the AR owed. Even more concerning, the U.S.
In addition to the effect of inflation, AR loses value as a result of profit dilution (when customers do not pay you the full invoice value due to payment deductions or disputes) and bad debt losses. This ties into all the Covid startups and the lack of bankruptcies while stimulus funds were available.
A corporation is also eligible for more tax deductions and credits. In a sole proprietorship, there’s no legal separation between the business and the owner. The owner is personally responsible for the business’s debts. LLC vs. Sole Proprietorship: Legal Protection. On top of this, LLCs offer tax flexibility.
If a key individual of the business unexpectedly passes away or becomes disabled and can’t work, the cost to the business can be even higher. Key person insurance gives you options in these circumstances, so you’re not forced to shut down or claim businessbankruptcy. How Much Key Person Insurance Coverage Do You Need?
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