Five risks SME managers
should consider

Your responsibilities as a company manager go beyond your day-to-day decisions. You have to ensure that the company meets its financial obligations. If the company does not comply with applicable legislation and is unable to honour its debts, you may have to pay out of your own pocket. Being a company manager is not without risks. If you hold this position, you should be aware of the debts for which you could be held accountable so that you can act in full knowledge of the facts and, above all, take measures to protect yourself.

Here are the main financial responsibilities you could be liable for:

Payroll deductions (income tax on employees’ wages, employment insurance deductions, pension, parental insurance, etc.)

If the company neglects to make payroll deductions from employees’ wages and/or remit these amounts to government authorities, you could be personally liable.

Salaries and annual vacation entitlement

In order to protect the rights of employees, various provincial and federal laws stipulate that unpaid wages and vacation pay are also the responsibility of the company’s managers. As a manager, you must therefore ensure that the company’s employees receive the compensation they are owed. Otherwise, if the company goes bankrupt or becomes insolvent without having paid these amounts, you will have the obligation to do so.

Goods and services taxes

Managers must ensure that the various government reports (DAS, GST/QST and others) are filed and paid on time. If the company has not submitted them, government institutions can claim the full amounts due from the managers.

Environmental liabilities

Under current legislation, managers are jointly and severally liable for a company’s environmental liabilities. For example, imagine that a company has deliberately dumped used oil on a piece of land. Its managers could be held personally liable and could be required to pay significant sums.

Guarantees

Managers or shareholders often personally guarantee amounts due by their company to its credits and business partners. For example, they may provide a personal guarantee so the company can obtain financing, particularly when negotiating the line of credit with a financial institution. But beware: if the company ever goes bankrupt, faces a liquidation order or is dissolved, the managers could be personally liable.

As we have just seen, being a manager involves real risks. In order to minimize these risks, all managers should consult experts like lawyers, accountants and insolvency professionals such as licensed insolvency trustees who will help them protect themselves.

Are you a company manager? Do you need advice? Book an appointment with one of our insolvency experts. It’s totally confidential and they can help you find solutions.