I have debts from my business; what is personal debt v. company debt?

Often times I meet with people in our Mississauga or Brampton offices who want options regarding their debts. Many times these options are not only with respect to personal debts but with debts that relate to a business they have or once had. This usually leads to the question; what debts from a business will you be personally responsible for?

The answer depends on what type of business you had. Was it a sole proprietorship or an incorporated company where you were an officer and director?

In the case of a sole proprietorship, there is no distinction between your personal debts and those of the business. The debts are all yours personally and you will have to deal with them along with your personal debts.

In the case of an incorporated company, the debts from the business are the company’s debts and not yours personally unless you personally guaranteed the debt for the company. For instance, a lease for a location the business operates from. The other exception is debts of the company that officers and directors of the company are responsible for. For instance, employee claims for wages and also certain government taxes such as, GST and PST. Generally, as an officer and director of a company you will be responsible for these debts personally and will need to include them with your personal debts when making a plan for dealing with all your debts.

If you find yourself with business debts and personal debts that are overwhelming and are uncertain about your financial options and want advice on dealing with your debts, please contact the Hoyes Michalos office near you, and one of our professionals will meet with you personally to help you make a plan to deal with your debts.