There is always debt involved in doing business. It usually takes money to make money. However, working with debt is a great responsibility. A responsibility that not everyone does well. As a business owner, it is you that is personally responsible for managing the debt for your business. Sometimes, businesses have a difficult time paying those debts and end up facing insolvency. Principle Insolvency is here to talk about different kinds of debts to better understand what type of debt you’re working with.
Sole Trader Debt
One type of business debt is sole trader debt. This is when one person owns and runs their own business. They are going to be personally responsible for the debt. When paying the debts isn’t an option, it can leave this person responsible for it. Personal insolvency is always an option if you can’t keep up with the debt, but it definitely comes with consequences. You can look into your options if you’re in this position.
Partnership Debt
If you own and run a business with one or more people, you are in a partnership. In this case, all of the partners will be equally responsible for any debt that the company is carrying. However, if the partners can’t be found or cannot pay, you will be pinned with the entire debt yourself. The key to handling debts you can’t pay in a partnership is communication. You need to be in constant communication with the people you’re doing business with. If they can’t help you pay, again, you will be looking at personal insolvency options.
Limited Liability Company Debt
When your company is registered with the New Zealand Companies Office, it means that you are a LTD company. This also means that the entire company is responsible for any debt that you have. Sometimes, one person with guarantee the company debts, and if that’s you, you will be held responsible. When a company is facing a loss due to the fact that they can’t pay back their debts, a liquidator will more than likely be assigned to help the company with that process. It is imperative that you don’t continue to trade during this time as you can be prosecuted for doing this after your company has become insolvent.
What to Do When Your Business is Insolvent
No business wants to face insolvency. This is a worst case scenario, for sure. However, it happens sometimes. When it does, you are going to need to have someone to help guide you through the process. This is where Principle Insolvency can come into play. We will help you sort out all the debts that your company owes. Whether you are going to be looking at personal insolvency options or a liquidation of your company, you can turn to use to help guide you through the entirety of the process. We want to help you through these troubling waters. Call us today!