What Happens When I Owe Money to My Own Company?


It is not uncommon for directors or shareholders to owe money to their own company. This situation often arises through director’s loans, drawings taken in excess of salary or dividends, or business expenses that were never properly reimbursed. While this may seem manageable when a company is trading normally, it can become a serious issue if the business faces financial difficulty or enters liquidation. Understanding what happens when you owe money to your own company is essential, particularly if insolvency is a possibility. The way this debt is treated can have significant legal and financial consequences for directors.

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