Aegis Financial Consulting

Business Financial Planning

Some of you will have business interests rather than just dealing with your own private client affairs. This can be as simple as operating as a sole trader, but can also include limited companies and partnership structures. For smaller businesses in particular, this can be quite challenging, as many financial advisers cannot fully comprehend the requirements of a business, but most employee benefit consultants target the larger companies for their services.

Companies can  invest just like private clients can, though there can be some additional restrictions on this if you want to make sure that your company continues to be a trading company rather than a holding company (your accountant can tell you which is more suitable for your circumstances).  There are some key differences, such as companies not being able to own Individual Savings Accounts (ISAs) and the fact that the tax regime is corporation tax rather than income tax and capital gains tax.

In general it is quite unusual for trading companies to make significant investments rather than either paying out the profits or directly reinvesting into the business itself, but for small owner-managed companies it can sometimes make sense to invest a proportion of the company’s funds while waiting for an opportunity to extract value from the company tax efficiently.

Since the implementation of Auto Enrolment, most employees are used to the idea that their company will have a pension scheme for them to join – in fact they would need to take active steps to avoid becoming a member automatically.  For the smallest company, this requirement is unlikely to affect them, but this means that owners of small businesses can feel like they are falling between the cracks of legislation.

If your company is too small to justify setting up a group pension scheme, there are still options available.  It is possible to set up something as simple as a platform pension which accepts employer payments, while those who require a very sophisticated offering can instead go for a Small Self-Administered Scheme (SSAS).

Businesses have a unique requirement for insurance.  In addition to the general insurance policies that cover things like employer’s liability and professional indemnity, there are some key areas where I can help.

These generally fall into three main categories, namely Key Person Insurance, Shareholder Protection and Death in Service.  Key Person Insurance is designed to provide the company with a lump sum should a very key individual (e.g. Head of Sales) die, potentially leaving the business with the cost of replacing them and the lost business from their absence.  Shareholder Protection answers the question “what happens to my share of the company if I die?” and is particularly important where a company is owned by multiple individuals, especially if those individuals would like to leave value to family members that might not be interested in continuing to run the company.

Death in Service is another common employee benefit, usually written as a group policy for larger companies.  For smaller companies, the benefit can be replicated using relevant life plans, which are individually underwritten like private client insurance but come with certain tax benefits that can make them very favourable options for small companies.

Your accountant will undoubtedly already be helping you to extract profit from your company efficiently.  Our service for tax planning is not intended to replace or override such advice, but instead aims to consider some additional options, including paying profits into a company pension (including how you might invest those contributions) and structuring your investments once you have actually withdrawn the money.  This latter aspect of the planning veers into Private Client Work.

I am very much on the private client side of financial advice, but to me that includes owner-managed businesses of all descriptions. So if you have a business but it has proved too small for the bigger players to be interested in, why not talk to me instead?

My fees for this area of planning are likely to be very similar to those for Private Client Work because of the significant overlap between small businesses and their owners.


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