As a business owner myself, I understand the opportunities and the challenges that we face on a daily basis, not least ensuring that employees are rewarded and happy in their roles, as well as protecting key team members and the business long term. That is why it so important that business owners have access to expert financial advice.

There are various areas where we can provide advice and assistance to you as a business owner, whether it is Auto Enrolment, Business Protection, Investment, Cash Flow or Planning for Succession.  Below is an overview of some of the most common requests we assist with.

Auto Enrolment

Auto Enrolment pension legislation is a requirement that all UK firms need to adhere to.  I work with businesses to help them understand and implement their responsibilities and provide an eligible scheme for their employees to enrol onto.

Pensions are increasingly complex and changeable for advisors as well as business owners.  However, with that said, it’s an important area of every business and our aim is to help you transition though to your staging date as quickly and efficiently as possible.  Our guide on Advice for Small Business Owners outlines the responsibilities you have as a business owner, the different schemes and how we can help you.

Over the next three years, staging dates for Auto Enrolment will be focused more on smaller businesses, so it’s essential that you know when your date is and what you need to do.  The fines from The Pensions Regulator (TPR) can be up to £10,000 per day depending on the size of your business if you miss your staging date, so if you haven’t already, taking advice now and putting in place the steps you need to take must be a priority.

Business Protection

We all know how important it is to protect our loved ones from potential loss of income through our own critical or long-term illness, or even death, but as a business owner it is just as important that employees who perform a crucial role within your business are also covered.

Keyman insurance is a form of business protection, a policy designed to pay out an agreed cash sum if a key employee suddenly stops work due to death or a critical illness. That person is classed as “business critical” – it could be the managing director, a senior finance or sales director or perhaps the head of development – fundamentally a person who is seen as a significant revenue generator or business figurehead.

Unlike personal insurance, the payment is a specified sum made to the business. It allows a company to shore up profits, to buy the deceased’s shares, perhaps repay company debts or cover recruitment costs. In essence it is an insurance that is often overlooked but represents extremely good planning for small businesses, if the business owners are able to set aside funds. There are 3 types of policies:

  1. Profit Protection – uses include shoring up profits, training and recruitment.
  2. Corporate Loan and Overdraft Protection – a cash sum for repaying company debt, especially useful if the directors have personal guarantees or second mortgages in place.
  3. Ownership Protection – used to buy out the deceased (or critically ill) director’s or partner’s shareholding

We can help you decide if such cover is advisable, the level of cover required and the affordability to the business. It also goes without saying that for small business owners, personal medical insurance and income replacement plans should also be considered as a form of business protection.

Investment and Cash Flow Planning

Waiting for income to come in whilst ensuring you also have enough money to pay your outgoings can be a big challenge for many small businesses trying to manage their cash flow – so they can sustain and grow their firm.  Whether you are looking to understand the different types of investments available for your business, investing surplus cash to generate a long-term income or looking at other options to provide a regular cash flow into your business, we can help you look at ways in which you can manage this.

There are a number of different types of schemes available for you to get vital investment into your business. Investing into property, pensions, antiques etc. could also provide your business with additional long-term income that can be used to enter new markets or take on new employees.

We can help you by sitting down and discussing your current and future goals and the most suitable options available to help you make the most of the opportunities open to your business.

Succession Planning

At some point, if not now, you will consider what you want to do with your business.  Selling to a business partner, transferring to family members and retirement are all valid reasons for having a succession plan in place.

One of the most important long-term elements of succession planning is how you can build up an adequate level of income to cover the cost of your future goals and desired lifestyle when you leave the business.  There are a variety of tax efficient ways in which you can do this such as extracting profits.  When you maintain profits in the business and take them out after sale it is taxed as capital rather than income.  In addition, your pension contributions also offer tax benefits which may be more attractive and efficient in terms of generating a future income.

It’s also worthwhile considering ways in which you can accumulate assets through tax efficient vehicles such as pension funds other investments (some of which can have tax implications for the business). Doing this will enable you to identify sources of future income and the extent of your personal wealth after you leave the business.

Our Personal Service

Owning a business can and should be a rewarding experience and success will hopefully come through careful planning and consideration for any events that may occur in the future.  At Bridge Investments, our aim is to keep you informed and updated about any opportunities that will help you including; a full review of your pension, business protection and any employee benefit requirements; help setting up and administering schemes; providing your business and employees with regular financial reviews (and presentations if required) and; ensuring you are fully abreast of all legislation that affects your business. We pride ourselves on a truly personal service.

The purpose of this article is to provide technical and generic guidance and should not be interpreted as a personal recommendation or advice. Note: Auto Enrolment and investing in property and antiques are not regulated by the Financial Conduct Authority.

 

 

Angus Kirk

Financial Planner at Bridge Investments
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