A part of our fast facts for Directors series of articles
People generally use a company to run business for a number of reasons, but generally either for tax, or to protect their personal assets.
However, directors of a company can be personally liable for some of the things the business does. Being exposed in an area of personal liability means you are not getting the protection you hoped from your company and your house, and now freedom, could be at risk. You need to know your obligations as a director, and be careful not to expose yourself to personal liability.
In particular, Superannuation Guarantee and Taxation debts are major obligations which can bring directors unstuck. Because, up until now, the process to raise concern about unpaid superannuation guarantee payments was lengthy and usually relied on employees raising their concerns, these payments were often missed by businesses when cash flow was tight.
Following an increase in unpaid super and taxes the government has done a lot of things to ‘crack down’ on these payments not being made – the big one which took effect from 1 April 2019 (for Superannuation Guarantee Obligations since 1 July 2018) is a penalty of up to one year in prison for non-payment of Superannuation Guarantee Payments for employees.
This goes hand in hand with a raft of changes for business, including One-Touch Payroll being extended to small business.
Be careful of your obligations. If you are a director of a company, and want to better understand your obligations and potential liability, give us a call.