Financial planning for business owners

Business owners wear many financial hats. It is their responsibility to plan ahead – for the company, for themselves and other shareholders as owners, for the management team and for employees.

Planning is the key. At Acumen Financial Planning, we regularly advise our business clients on everything from how to structure the company to extracting profits tax effectively. There are numerous examples of financial planning for business: our advisers are adept in assisting owners and management through straight-forward and very complex matters.

Risk Management

We have a tried and tested process to help businesses identify and deal with risk. In this way, our business clients can be sure that the financial welfare of their business and its people are well looked after.

Every business has key workers – without whom the company could suffer irrevocably. Firstly, we identify these people, and quantify the risk in financial terms of them being unable to work due to death or incapacity.

Having established the risks that can be cost-effectively passed to an insurance company, we obtain competitive quotations and are then able to recommend the best course of action. Our business clients feel protected from the unforeseen.

Company

Whether a sole trader, partnership or company, every business has a commercial reason to exist – in other words, each exists to make a profit. However, setting up a business also brings with it financial obligations.

A business is responsible for the salary and benefits packages offered to management and other employees. It is also responsible for protecting itself, by maintaining adequate insurance cover to offset the cost of losing a key member of staff through death or illness, for example.

Each company must decide what to do with surplus funds in the short-, medium- and longer-term. Striking the right balance between return, liquidity and tax efficiency can be a challenge, particularly when interest rates are historically low.

There are other pertinent questions too: should business premises be rented, bought by the company or by the business owner? There is no stock answer: the right course of action depends on the company’s circumstances and outlook. Our team has been involved in enough transactions of this nature to ensure our client’s best interests are always served.

Owners

It is from the company’s profits that business owners are rewarded in the short-term; in the longer-term, they might also benefit from selling all or part of the company.

Business owners tend to be very focused on their business, sometimes to the exclusion of other aspects of their lives and financial affairs. In the long-run, though, business life is relatively temporary and there is a need to plan for a life after business.

We are frequently invited to impartially advise business owners on all manner of financial subjects. These include:

  • Extracting business profits tax-efficiently by way of salary, bonus, dividends and pension contributions.
  • Advising on partnership and shareholder agreements, alongside our colleagues in the legal profession.
  • Ensuring that protection is in place to safeguard the company if one or more business owners were to die or become permanently incapacitated.
  • Calculating whether or not it is financially possible for owners to take life easier and, if so, when.
  • Mapping out the transition of ownership to management, the next family generation or outright sale to a third party.

Small businesses will not necessarily have a manager or a management team particularly if the owner is ‘hands on’, but the company’s resources – whether human or financial – must be managed effectively.

Ensuring continuity of management is vitally important. To this end, we provide a variety of services to its business clients, ranging from devising benefits packages for management to aid retention to coaching the management team and other key employees on the importance of having their own personal financial road map.

Where appropriate, our advisers deliver presentations to management teams on possible future ownership, outlining the benefits and potential financial implications that such a move would entail.

Employees

A contented workforce is a productive workforce. Retaining staff that have the right attitude and aptitude, even amid an economic downturn, can be a challenge. Studies have shown that a contented workforce can help an organisation to succeed and can even determine whether or not a struggling company survives.

Our advisers can ensure business owners have an effective and relevant benefits package in place for employees. We are often asked to run workshops and surgeries to communicate benefits packages and other financial planning strategies to workers. Many of our corporate clients also entrust us to administrate pension, protection and savings initiatives for their workforce

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