Accountants and client insolvency: what you need to know

Taking a large sum of money from a superannuation fund to prop up a business and pay off creditors may seem like a risky way forward. Yet for anyone who has been involved in the collapse of a small business, this is a common scenario.

It is also common for a business to end up in bankruptcy or liquidation despite the attempt to save it.

As debts mount, business owners often look for ways to ease the pressure from creditors, and it is all too easy to make unwise decisions. For some, this includes buying time by selling personal assets, borrowing from friends and family, and extending credit, but all these tactics do is delay the inevitable.

While such tactics may keep a struggling business afloat in the short term, the future is already written if businesses do not seek advice from accountants and insolvency experts. This is where accountants play a critical role. Many businesses will try to trade themselves out of any difficulty that they’re in, and they often don’t realise that they are in difficulty because they are unaware of the extent of their tax liability.

Accountants are the frontline professionals who can identify that there is a problem, and that expert help is needed.

Should you require further information or would like to discuss your business operation please contact WSC Group.