From remuneration planning to exit strategies and everything in between.

The pressures of running a successful business often take priority over time spent planning for your own financial security.

Many small to medium sized firms lack a financial plan. This oversight may result in you having insufficient wealth to enable you to live the lifestyle you want and deserve, paying more tax than necessary, or running out of money in retirement, to name but a few undesirable outcomes. 

There are a number of important issues business owners should consider:
How do you extract your profits in the most tax-efficient way?
What is the most effective way to reward and motivate employees?
How can you make sure you can afford a good retirement?
To whom will you pass on the business when you retire?
How will you finance expansion?
What would happen to the business if you (or your co-owner) were to die or fall seriously ill?

We have the skills and knowledge to help you create and put into action a financial plan. We can help you to guard against unexpected hazards, extract the maximum value from your business, and provide for your employees, all in a tax efficient manner. 

Our financial planning for business owners includes:

  • Remuneration planning.
  • Corporate investments.
  • Exit strategy planning. 
  • Directors’ Share Protection.
  • Key Person Protection.
  • Lasting Power of Attorney.
  • Pension planning.
Many of these things will seem far in the future or unimportant if you are immersed in the running of your business or in a high growth stage. However, their importance may well become clear to you when it is too late. With our help, you won’t be doing it alone and the exercise may well give rise to important insights about your business and objectives.

We will help you structure the extraction of your profits in an effective manner. Of course it is equally important to consider a tax efficient remuneration scheme which will help you to attract and retain the best staff. We will help you mitigate your personal liabilities by looking at tax efficient remuneration, for both you and your staff.

Establishing an exit plan early on in the life of your business is crucial if you’re to extract the highest value from your investment of time and money. It informs decision making about the future of your business, developing it with the exit plan in mind. The right exit plan will depend on what the outcome you want to achieve; whether the business is intended to provide an income until retirement, or to be passed on to your heirs, or sold sooner rather than later. 

Considerations if the business is to be sold

How will you value the business?
Do you intend to retain any shareholding?
What tax will be payable and can it be mitigated in any way?
Where a shareholder of a family business dies, to whom will the shares pass?
What consideration has been given to any Inheritance Tax liability?

If your goal is to pass the business to your heirs, you will need to decide how to accomplish this. If it is already run as a family business, this may just be a case of sharing out equity and determining who should take over your job responsibilities. However, if your business affairs are kept separate from your family or any beneficiaries, you may need to consider a variety of other factors, such as:
Who will take over the running of the business?
Can your beneficiaries exercise any sort of control over the business and if so, how?
Should a share of profits be reinvested in the business or divided up amongst beneficiaries?
How will your death affect any partnership agreement?
Should any shares be held in trust?

Having an exit plan gives you options

Although your intention may not be to sell in the near future, unexpected offers to purchase your business could change your mind. With an exit plan in place, you’ll be able to make an informed and rational decision on whether or not to sell at that time.

An exit strategy should be a major part of your retirement plans, but is also crucial should you suffer ill-health at any point. It allows you to move quickly to sell the business if unexpected circumstances necessitate a rapid sale.

If your business is your pension how are you going to use this to fund your retirement? Are you going to sell the business, or ask your children to run the business so you can continue to be paid an income in retirement?

As a business owner, you are completely responsible for your own retirement planning. Many small to medium sized business owners make the mistake of believing that the sale of their business will provide them with a large enough windfall to cover their retirement. Healthcare and living standards are constantly improving, people are living much longer – there is a very real risk that you may outlive your savings. Also, market conditions may affect your ability to sell your business. You might want to build flexibility into your retirement plan, so you can sell your stake during a strong market or work longer if a recession hits. However, it is important to have a contingency plan in place in the event that your business does not sell at the right price at the right time.

Key person protection

Could your business survive if key personnel were suddenly not around? In almost any business, there will be a few people who make a significant contribution to the company’s profitability. The loss of a key director or employee in your business could have a severe impacts, such as:

  • Loss of profits
  • The recall of loans
  • Reduced capacity
  • Loss of key clients/contacts
  • Reduced practical know-how

By having the correct protection in place and making sure that they are regularly reviewed, you can help safeguard your business against the financial loss on the death, terminal or critical illness of a key person. Key person insurance is paid to the business, and protects against a possible fall in profit, gives financial support to pay company loans and allows the company to recruit and train a replacement.  

Shareholder protection

The protection needs of partners and shareholders are similar – to enable them to ‘buy out’ the share of a business partner who has died or become too ill to continue working. Partnership and shareholder protection is designed to ensure that control of the company stays in the hand of current owners, and that a family that inherits shares receives their full value without the business having to raise money to buy them out.

Whether you are a business owner, director, partner or sole trader, safeguarding the future of your business with a Lasting Power of Attorney makes good business sense.

Difficult and unforeseen circumstances such as the physical or mental incapacity of key people can put a business in real difficulty. If you become incapacitated, even if only temporarily, is there somebody who has the authority and ability to run your business and its financial and property affairs? Would your absence put your business and your employees’ financial futures at risk?

Unless you have appointed an attorney, fundamental business operations may not be possible: opening, closing, and accessing business bank accounts; dealing with business property; investing assets; dealing with tax affairs. The risk and disruption to your business could be enormous. This could result in staff wages not being paid on time, third party suppliers not being paid, business loans and mortgages not being serviced, and potential contracts lost. If you, like many other business owners, act as personal guarantor for business loans then your personal assets including your home could be at risk if your company can no longer function.

There is a common misconception that a Lasting Power of Attorney (LPA) is purely for personal use. This is not the case. You need a specific LPA for your business. 

An LPA gives you the opportunity to prepare for the unexpected by allowing you to appoint someone who will step into your shoes and look after your financial affairs should you become incapable of dealing with them yourself.

Make a Lasting Power of Attorney part of your business continuity plan and protect the business that you have worked hard to build.

Tax and Trust planning are not regulated by the Financial Conduct Authority.

Inheritance Tax, Legal services, Trusts, Will writing and Estate planning are not regulated by the Financial Conduct Authority.

The value of investments and income from them may go down. You may not get back the original amount invested.

Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change. 

Tax treatment is based on individual circumstances and may be subject to change in the future.

A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.

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Speak to an adviser who will assess your objectives, current position, and help you plan a course of action. It’s also an opportunity for you to get to know us before deciding to engage our services. You can ask as many questions as you need. Your first meeting with us where we will discuss the ways in which we might help you is free of charge. Contact us today to book an appointment.

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