When can you become personally liable for a business debt?
The purpose of having a company is to separate liability from the company and its directors. However, in certain circumstances a company director can personally become liable for a business debt, if the director has done one of the following:
- signed a personal guarantee to secure payment of a business debt;
- incurred a debt knowing the company was insolvent; or
- failed to comply with a Directors’ Penalty Notice issued by the Tax Office demand within time.
If a company director has become personally liable for a business debt and cannot pay that debt, the director may need to consider personal bankruptcy.
Call us today if you would like any more information about business debts on our toll FREE advice line on 1800 210 073.