Director Personal Liabilities

When is a Director Personally Liable

We offer a free opportunity to discuss your business finances with a trustee at no charge to you, Call today, 905-721-7506.

Liabilities for Small Business Owners

When entrepreneurs are first starting their small business, they are often advised to set it up as a corporation to protect themselves from personal liability.

Many directors, who are often also the owners, are surprised to learn that incorporating their business doesn’t provide them with the protection they thought it would.

If the corporation fails and is unable to pay the bills, the directors of a corporation could face personal responsibility for some debts:

Payroll Source Deductions

Directors may be liable for any unpaid amounts that are required to be deducted from employees’ wages and remitted to Canada Revenue Agency.

This would include deductions for Canada Pension Plan and Unemployment Insurance.

Business Bankruptcy

Goods and Services Tax – GST

If the corporation does not pay the amount owing for the Goods and Services Tax/Harmonized Sales Tax, Canada Revenue will attempt to collect from the directors of the corporation.

Credit Cards, Bank Loans & Leases

Banks, credit card companies, and landlords often require the directors of a corporation to sign a personal guarantee before they will extend credit to a business.

This is especially true in the case of small businesses because if the corporation does not  pay its debts the personal guarantee allows  the creditor to sue the director and collect from them personally.

It’s important to read these agreements to determine your personal exposure.

Wages

Directors may be held responsible for up to six (6) months of unpaid wages due to employees while acting as a director and up to twelve (12) months of unpaid vacation pay.

★★★★★ We did everything possible to keep the business going but it was no use.  My friend suggested YanchDey to get some advice.  I called and they were very helpful and informative, they even told me I could buy some of the assets back from the company that I wanted.  The process was straight forward and the trustee took care of everything for me.  If your considering a business bankruptcy give them a call.  Paul Vorvis, Ajax

What are your Options?

Small business failure can be painful but you can recover.

If you are a director facing personal liability for a corporation that is struggling or has ceased to operate, a consumer proposal or bankruptcy will provide you with relief.

At YanchDey, Licensed Insolvency Trustee, we offer a free consultation to discuss your situation and explain your options. Call today and we’ll find solutions together.

Call 905-721-7506