Posted by 2014-08-09 15:29:00
Title: Hello! As an entrepreneur, when do you decide to throw in the towel? I have a mineral exploration ...
I have had several clients fold operations over the years.
I generally make the recommendation to stop operations when the following has taken place:
1. The company has amassed a significant accounting deficit
2. The company has been in operations for several years and has neither turned an accounting profit nor a positive cash flow
3. The major shareholders are amassing large amounts of personal debt to keep the company alive
With the limited knowledge I have in this case it is a pretty clear case of entrepreneurs keeping a dead business alive for too long. If you are at the point where you can’t pay your payroll installments you are in serious trouble. Payroll and HST are trust accounts and the CRA can come after the company directors for these amounts.
If “angel investors” are not willing to put money into this project, then really no one is going to put money in as these investors are willing to take a much higher level of risk than normal investors.
I think you need to stop the bleeding and fold this business as it seems like you will continue to dig a deeper hole for yourself personally.
Partner, Campanella McDonald LLP