After some advice please or if someone can refer me to the right person,
My partner (not married) has his own small buisness- he is the director of the company, it is a pity ltd company (not a sole trader) (The company doesn’t hold any assets except a work vehicle) I’ve Heard directors can be held personally liable , he owes $18,000 on workers insurance (he estimated wrong) (and has recently paid $5k off and set up a payment plan for the rest)
and probably around $50,000 + in taxes. (EDIT-these taxes have accumulated over about 4 years) The reason is that he said he can barely keep a roof over our heads by the time he pays employee’s, taxes, insurance, materials etc he doesn’t get paid weekly and sometimes can take weeks or months before clients pay him.
We have an investment property which we own 50/50 together. We have a small mortgage on this property.
Can our property be taken from us because of his debts?
The property is not in the company name. We currently rent our existing home but are thinking of moving into our investment in the coming years
Can our house be taken from us because of partners debts?
Can our house be taken from us because of partners debts?
Posted in:
Relationships & Marriage, Men's Business, IM's In Business, Money
7 Replies
The best thing he can do is get a payment arrangement in place and pay it regularly. Other than this he could refinance and pay these debts off to avoid any further action. If they need to recover debt then yes they can use assets if it’s not being paid. It would be last resort for non payment. It would take a bit to get to that stage. Get payment arrangements in place asap as little as you can if need be but it needs to be in place.
They can also recover it yearly from tax returns which they’ll probably start doing.
Some debt can result in this but other's can't. He needs a lawyer and accountant
I agree.
People think directors can't be held personally liable for company debt, but under certain circumstances they can.
Is his company solvent?
It's a criminal offence to trade knowing the company isn't solvent, plus digging yourself into a bigger hole.
Can the company service the debt?
Yep. Lots of professionals in certain industries keep property etc in the spouses name only specifically to avoid the slim risk of this if sued etc too. E.g. lawyers, doctors etc.
Trusts are another good one.
There are 2 screaming issues here. Clearly he isn't great at business admin, as he needs to earn a wage, and cover all costs including tax, and insurance so workers comp would be covered. Sounds like a tradie who doesn't have the right set up but is good at his trade. Yes the house with his name on the title could be taken if he chooses not to work out the debt if there ends up with debt collection and or legal proceedings.
best advice is get a lawyer, and an accountant. If he knows he owes the tax after talking to the accountant ask for a payment plan. the accountant can probably also help with where the costs are going wrong and how to set his biz up better to stop this from happening again. tax isn't optional.
A lawyer can tell you how to protect your assets and how to structure the business to keep it separate from personal (or trust, or in your name etc)
A few hard yards now will set up a successful business going forward