I have a business (Inc.) that is not making any profit & has accumulated lot of debt. Am I personally liable?
We are in business for over 5 years. Now, we are not making sales due to saturation of the market. Default on rent, recieved an eviction notice. Business doesn’t have the funds to pay. What happens in such case? How can I protect my personal assets such as homes and my car and all that?It is an Incorporation. Lease doesn’t have a guarrantee.
You need to make sure that none of your personal assets are secured by any of the debt. Also, you need to make sure that everything that is owed, is owed by the company (meaning the building was leased in the company’s name, loans were taken out in the company’s name). Any debt that fails to reference the company is your responsibility. The entire point of incorporation is to protect the principals and investors. The only time anyone can penitrate the “corporate viel” is if you have been fraudulent, negligent, or have engaged in criminal activity. In theory, they could take you to civil court for your debts; but as long as you have proof that everything was in the company’s name, and you were in no way misleading, they have no case.
Coffee with Joe 4-8-10: Debt Saturation