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If a business goes bust.....

(9 Posts)
inadreamworld Sat 09-Nov-13 19:14:08

DH and I were having a (hypothetical at the moment) chat about what if he and a mate started up their own company buying cheap/run down properties, doing them up and then selling them on at a profit (his friend is a builder).

My question is this. Sounds a bit pessimistic but if the worst happened and the company went bust with say, debts of £50,000 - £100,000 would we lose our family home? We are lucky enough to own our flat outright - we don't have a mortgage.

Obviously DH wouldn't want to do anything to put me or the children financially at risk.

NoAddedSuga Sat 09-Nov-13 22:03:32

Yes you would lose your home

You would not lose your home if you were a limited company though.

When you are a limited company, assets can only be taken that belong to the business to pay off any debt thats business related. The debt has to be under the company name though.

If you are not a limited company then personal assets would be taken to clear any debt

inadreamworld Sun 10-Nov-13 23:32:07

Thank you Suga - sounds too risky! And I expect forming a Ltd Company takes time and money....

Pisces Sun 10-Nov-13 23:34:05

You can become a limited company in the space of about 10 minutes and the cost can be under £20.00. Much safer way to proceed. You will need an accountant through to file your statutory accounts.

Flibbertyjibbet Sun 10-Nov-13 23:34:37

If you borrow money to buy the properties then the lender will take a personal guarantee from the directors...
Which means the directors personal possessions and bank accounts can be used to pay back the debt. Yes that would include your house.

Flibbertyjibbet Sun 10-Nov-13 23:35:50

Sorry just to clarify, the directors of the limited company that you might set up.

makeusawebsite Mon 11-Nov-13 17:37:10

Setting up a limited company is the way to go.... however, as a new company you will struggle to even get a lease on a building without having to become personally liable for it....let alone buying a property.

Limited companies do protect you in certain situations.... but in most cases where a third party may see risk they will require you to be personally held liable.

inadreamworld Wed 13-Nov-13 09:25:16

Thank you everyone. Really appreciate the advice. I think I will stick to being an English teacher for now!! But this is really useful to know.

HogFucker Wed 13-Nov-13 13:32:52

There are financial implications to being a Ltd co too though - more expensive to submit financial information.

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