Company Y was incorporated in March 2011 with a sole Director/Shareholder. The company grew very quickly and in a very competitive market saw significant success. However, due to this success, the company took on more work than what the staff could realistically produce.
At the same time the management of the company did not understand how to account for its sales and expenses. This poor management led to a lack of funds available, despite large deposits being paid by clients and ultimately the company could not afford to continue.
The company has a large number of creditors, many of whom have been left with incomplete houses and less than satisfactory workmanship. Therefore many refused to pay further funds as per their contracts.
Since the company has been placed into liquidation it has been established that GST was incorrectly accounted for and funds available had not been received. Creditors have been left with incomplete houses and no construction plans due to poor company record keeping.
Lessons for Directors
Focus on getting things right. Don’t focus on having more things. You may be good at what you do, but if the ‘business’ side of things isn’t for you, you should seek professional assistance.