Impact of Bankruptcy on my Business

Business Debts

If you are having cash flow issues in your business and are finding that your business is falling further and further into debt, you may be operating while insolvent and this is a criminal offence under ASIC. Companies in financial difficulties may require a receiver to be appointed.

If your company s unable to meet its debts and you as a director have provided personal guarantees for these debts, you are able to apply for bankruptcy and include these debts n your own bankruptcy petition.

Do not ignore debt collectors. If your liabilities exceed your assets and you do not know how you will ever repay your business debts it is best to seek professional debt advise immediately on 1300 923 754.

Remember that operating a business while insolvent may subject the director to various fines by ASIC, a criminal prosecution or even imprisonment.

Personal Debts

IF you are a business owner your personal bankruptcy may have an impact on your business. While you are allowed to run a small business while being bankrupt (either under a business name, as a sole trader or in partnership), you have a legal obligation to tell every person you deal with in business that you are an undischarged bankrupt. Under certain circumstances you can operate a business whilst bankrupt. However you are not allowed to remain a director or manage a corporation as a bankrupt and even following your bankruptcy unless you have received court permission to do so.

If you are registered for GST and wish to continue in your trade or profession during your bankruptcy, you required to notify the Tax Office of this so that your pre-bankruptcy GST liability (if any) can be separately identified. The Tax Office will note the date of your bankruptcy against your ABN. If you wish to continue to use the ABN you will need to contact the Tax Office and arrange to have your ABN reactivated.

Regardless of Bankruptcy you will still be responsible for lodging your BAS Statements. There is no restriction on applying for an ABN after becoming a bankrupt.

 

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