Protecting your business
Most small to medium sized enterprises could find it difficult to carry on should they lose one of the founding partners or directors. Yet not all have a plan in place to ensure the continuity of the business should the worst happen and one of the owners die or become long-term incapacitated.
Protecting against such eventualities involves two steps. Firstly, it is important that the articles of association or partnership deed clearly sets out what will be done in various circumstances; who will be entitled to purchases shares, and on what basis, should an owner die; or under what circumstances of incapacity the remaining owners will be able to exercise control over the business without the participation of the one who is unable to act.
The second stage is to ensure (if the terms of a company will allow for shares to be purchased by the remaining owners) that adequate insurance is in place to cover the costs (including clearing any directors' loan account) without placing an undue strain on the business. This can be arranged in a number of ways including cross life insurance or self insurance under trust.
Other key employees
It is not simply the loss of a director or partner in the business that can cause major financial difficulties. In many companies there are employees without whom the business could be affected. For example, the loss through death or incapacity of a key sales person, financial controller, information technology expert or even the transport manager could result in damage to customer or supplier relationships that might result in loss of business or even the withdrawal of vital credit facilities.
Fortunately, it is possible for us to help you assess the extent of the risk and then put in place insurance that will provide a lump sum or regular payments to cover the increased costs involved in securing a suitably qualified replacement as well as making up any shortfall in gross profit.
For more information about how Dawson Whyte can help you, please click here.
Financial planning for businesses
Protecting your business
Employee benefits
Occupational pension transfers
Executive benefits
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