There is a certain amount of truth in the fact that doing business is going to always require debt of some sort. However, if you aren’t careful, you can run into trouble with too much debt. It is a fine balance between enough debt to grow your business and not so much that you don’t have the revenue to pay back the money you have borrowed. When your company finds itself in trouble and with too much debt, it may leave you wondering who is responsible for all this debt that has accumulated. Principle Insolvency is here to talk about different business structures, and who is responsive for surmounting debts.
Determining Your Type of Debt
If you are in trouble and have too much debt for your business to handle, it is important to know the type of debt you have and who is responsible for it. We are going to take a closer look at different scenarios and who is responsible for what.
– Sole Trader Debt: If you are someone that owns and runs your own business on your own, you will be the one that is responsible for the debt that accrues. You will also be responsible for the taxes on that debt. If there is no way you can handle the debt you have, you can look into personal insolvency options that are available to you. This might include bankruptcy, debt repayment order and no asset procedures.
– Partnership Debt: When you run your business with the help of one or more people, the way you handle the business debt will be different. All of you will be equally responsible for it. This is going to be handled similarly to sole trader debts in that you will all have to look into handling your personal insolvency options available to you.
– Limited Liability Company: For those of you that have your business registered with the New Zealand Companies Office, it’s the company itself that will be responsible for the debts. There are situations where company owners might have fronted the company debts, and in that case, that individual will be responsible for the debts. When the debts fall to the company, there might be a receiver or a liquidator that can help you sort things out and determine your next move. Whatever you do, you should stop trading immediately if you know you’re in trouble. If you don’t, you might face legal action for trading once you knew that the company was in insolvency.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If you are concerned about insolvency, you can turn to Principle Insolvency to help you take a closer look at the options you have available to you. We will ensure you make the move that will be in your best interest. We want to help you work through the insolvency process and help it go as smoothly as possible. Call us today!