Sole trader vs limited company debts — Business Debts

As a sole trader, business debts are your personal debts. There is no legal separation between you and the business.

In a limited company, debts belong to the company unless you gave a personal guarantee or the director's conduct triggers personal liability.

Personal guarantees, overdrawn director's loans and unpaid tax are the most common ways director debt becomes personal.

General information, not personalised adviceThis article is written to inform. It isn't personalised debt or legal advice, and Debt Compass is not authorised by the Financial Conduct Authority. A team member can talk you through the options and point you to a free debt help service or authorised insolvency practitioner before you decide on anything.

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