There are a number of risks associated with owning or running a business which may arise from:
People trading as sole traders, partnerships of individuals, or individual trustees of a trust are personally liable for the business risks. Even if the business is conducted under a limited liability company, the law may look through the corporate structure to reach individual officeholders under certain circumstances. For example, a director of a company can be personally liable for business debts if the business was trading while insolvent or be personally liable under occupational health and safety (OH&S) laws.
When a person has personal exposure to business liabilities, all their assets, both business and personal, including the family home, may be at risk.
It is not uncommon for a person, whether in business or not, to hold real estate, ASX listed shares, or unlisted shares in their own trading companies, in their personal or spouse’s personal name. When a person owns assets in their personal name, the assets can be exposed to creditors or a trustee in bankruptcy. It is noted that some professions such as auditors, liquidators and medical practitioners are required to individually bear personal responsibilities for the business activities.
The degree of exposure and risks a person faces depends on their specific personal circumstances. We provide business structuring and other relevant professional advices for asset protection purposes, bearing in mind the taxation implications for the person and their estate planning objectives to provide optimum overall asset protection strategy.