Business founders face personal liability risks to family homes

Small business founders face significant personal financial risks, particularly regarding their family homes, due to expanding liability landscapes. A primary concern is the Australian Taxation Office’s Director Penalty Notice (DPN) regime. Under this system, individuals can become personally liable for overdue debts related to PAYG withholding, GST, or superannuation.

Enforcement of these notices has seen a sharp increase, with more than 84,000 DPNs issued in FY2024–25, compared to 26,702 in the previous year. Beyond tax obligations, founders may also face personal exposure from unpaid employee entitlements, workplace misconduct claims, cyber incidents, and breaches of directors’ duties.

Rising property values have further heightened these stakes. As the family home often represents a founder's largest asset, the equity held in personal names is increasingly vulnerable to commercial and legal risks arising from business activities.