Escaping Your Business Made Easy... Or Isn't It?
Like it or, business failures are a part of life, from a combination of an increasingly get-tough attitude from the IRD, those businesses which have been hanging on finally throwing in the towel and the shortage of working capital and credit out there.
Unfortunately the title of my article this month is an oxymoron and for many business owners, it's anything but easy to escape from their business because of:
- If the business has premises, the lease will be personally guaranteed, so if even if the rent has been paid up to date this alone could be a financial nightmare.
- If supplier bills remain outstanding and personal guarantees have been signed on the suppliers terms of trade they won't go away either.
- There are still one or two lucky business borrowers with unsecured bank borrowings but not many, so the bank will soon be sending out a plethora of demands in all shapes and sizes, as I've been receiving regularly for a client (where my office is the registered office) recently who is in difficulty!
- If there is outstanding finance on vehicles or plant or there are lease rental deals on equipment like photocopiers with unexpired terms they need to be sorted too.
- The IRD doesn't like to lose out either, and in fact are at the head of the queue, and so even if the business trades via a limited company the business owners may still be pursued for unpaid Income tax, not counting all those sole traders and partnerships who will remain fully liable for GST, PAYE, and Income Tax.
Now if you think this is all obvious and this article is unnecessary, in my experience you are in the minority as many business owners just don't realise how exposed they are to business liabilities. Makes you think, doesn't it, about whether to keep your business small or buy a house to trade from instead of renting and whether not wanting to pay your lawyer to set up a trust was a good decision at the time?
If you have any tax or business queries of any kind telephone 0800 ASK NICK, e-mail firstname.lastname@example.org or use our form. The information in this article is of a general nature and should not be relied upon as a substitute for specific advice.