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

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.