Corporate Services
As business owners, to build a successful, sustainable business takes a huge amount of time, hard work and devotion. The importance of considering your financial planning strategy for your business is often overlooked. At whatever stage of the business we will work with you to ensure that the foundations are in place helping to ensure that the financial security of the business, the employees and the owners are secured.
Business life insurance can support your business financially if something happens to your staff, your partners or more importantly you. Setting up a policy is about making sure your company is prepared – which is the best any business can do. And just as there are lots of different types of life insurance, there are various types of business life insurance you should consider. Here are five key types of cover to think about;
Key Person Insurance
This is aimed at protecting your company against losing the one person it simply couldn’t be without. Think about how your business would function without your key performer if they became ill and couldn’t work for some considerable time. How would you cope? Key person insurance might be the answer.
Relevent Life Cover
If you’re a small business with fewer than five employees, life cover can offer an alternative to group life insurance schemes and can be a very tax efficient way of offering death in service benefits – which can give staff and their families’ real value and peace of mind. It can be a valuable addition, or a starting point, for any benefits package while helping to retain your best people or recruit new talent.
Business Protection Insurance
Business protection insurance, sometimes called business loan protection, can cover various types of debt – from director’s loans, commercial loans and mortgages, to venture capital loans, overdrafts, credit cards and even personal guarantees. Unlike most life insurance pay-outs, when it comes to business protection insurance a claim can be paid to a business instead of a family member.
Ownership Protection
If you run your business with a partner or have shareholders, what would happen if you suddenly lost them? When someone passes away, their assets usually go to their dependants – that would include any shares in your business. And what the dependants want may not be what your business needs. For example, they may prefer to receive a lump sum, but you may not have the capital to honour this. That could mean you have to sell on shares, which could reduce your control of the business.
Many business owners put in a lifetime of hard work building their business only to throw away some of the rewards by failing to consider properly how they will exit from the business – both financially and as a manager.
Sound management over several years will add value to your business and allow you to start an exit relatively quickly when the time is right. You will need to concentrate on the main areas of you business to ensure a smooth exit.
Aim for a year-on-year increase in profits – reducing profits to cut corporation tax liabilities may make short-term sense but it could harm your business’ perceived value.
Make sure your accounts are in order and up to date and give a true picture of the business – It pays to be ready for any due diligence you may have to go through later.
Look to expand your range of customers and suppliers – over reliance on a few key customers will undermine your business’ value.
Aim to tie key customers, suppliers, staff and managers to long-term contracts.
Maximise your relief for capital gains tax (CGT) – you may be able to claim entrepreneurs’ relief which reduces the effective rate of CGT. So consider avoiding substantial holdings in property, shares or leaving money in the bank which may disqualify you from this relief.
The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.
Please note that advice with regard to exit strategy planning may involve the referral to a service that is separate and distinct to those offered by St. James’s Place.
