A Perth business that is not doing so well in terms of money may be insolvent. This happens when a company cannot pay debts when they become due. There are many reasons for this. This includes poor cash management or an economic crisis. It can also be because the company cannot collect payments from clients.
t does not matter. As a director of a company, you have several responsibilities that can be quite complicated. You will need an insolvency lawyer to help you get through the process if you do not want to become personally liable for the debts of the company.
Act Fast
Many signs of money problems may come out before it gets to the point of insolvency. Some of these include poor cash flow, difficulty in getting loans, and consistent losses. When you get a notice from the tax people that the company has unpaid taxes, then you know the company is in deep trouble. You should get legal and accounting advice at once. You have to take the right steps within 21 days of getting such a notice.
If, however, the experts or hardieslawyers.com say that the company insolvent, or at risk of it, your next step is to appoint a liquidator or voluntary administrator to start the process if you cannot find another way to save the company.
Avoid More Debt
You have to make sure that the company is not digging a deeper hole for itself. Trading or continuing to get supplies on credit when it is already insolvent or close enough to it for government work is a big no-no. If you fail to keep the company from doing these, you will be personally responsible. Put a clamp on operations as soon as you become aware of the financial situation.
Acclimatize Yourself
Find out as much as you can about the situation. You have to ensure that all records and transactions are complete and correct to comply with the requirements of the Corporations Act. If you do not, you will also face serious personal consequences. This can mean penalties, compensation lawsuits, and even criminal charges.
Insolvency is a serious situation, and it can have a significant impact on everyone involved. You have many tasks ahead of you as a company director, and you need the help of a competent insolvency lawyer and accountant. Winging it is not an option.