Good financial planning can help determine the success or failure of running a business. To help ensure the survival of your business it’s important that the business has suitable protection in place. Thomas Carroll Independent Financial Advisers offer expert advice on the following;
Shareholder and Partnership Protection
In the event of the death or critical illness of a shareholder, partner or member the business will face the question of how to retain control and assign fair value.
To help ensure control of the business is retained, the remaining owners need to have the ability to purchase the business share from the retiring owner or deceased owner’s estate. It is also important to ensure that the sale of the business share fairly represents its value at the time of death or retirement through ill health.
A shareholder or partnership protection scheme can easily resolve these problems by providing:
1. An agreement setting out how the business should be valued and allowing the surviving owners the right to buy the shares and the estate, or outgoing owner, the right to sell.
2. The funds to allow the business share to be purchased.
3. Additional funds to cover cash flow and loss of profits caused by the death or critical illness of a business owner.
Key Person Insurance
Key people are those individuals whose skill, knowledge, experience or leadership contribute to the continued financial success of the business. In many cases this could be the chairman, managing director, or specialist employee (such as an IT specialist), although it could be anyone who’s death or critical illness could lead to financial loss for the business.
The loss of a key person can cause far reaching problems for a business including the loss of relationships or professional expertise and the cost of recruiting a temporary or permanent replacement.
Key Person insurance could provide the firm with the cash injection it may need to help recover from this loss of profits. An income protection plan will also provide a regular income for the business if a key person is absent for an extended period due to illness or injury.
Being unable to repay loans can be a serious problem for a business following the death of a key person. For instance, director loan accounts should be re-paid off on death.
Business Loan Protection helps businesses pay an outstanding overdraft, loan or commercial mortgage, should a key person die or be diagnosed with a critical illness during the length of the policy.
We would be delighted to review your current arrangements and discuss business protection with you. Whatever the nature of the review, as Chartered Financial Advisers, you can be assured that we will provide a solution that is based entirely on your needs.