Welcome to the fourth part of our series on the advantages of collaborating with financial planners for business owners. Our third blog of the series covers ways you can protect your business. At our firm, we excel in providing holistic financial planning advice, working closely with our Corporate team to deliver substantial benefits to our clients.
We have found that business owners are often deeply involved in the day-to-day operations of their companies and have a strong vision for their business’s future. However, they often lack clarity when it comes to their personal financial plans or the specifics of their policies and investments. Many believe that selling their business will be enough for a comfortable retirement, without fully understanding the costs and implications of that retirement.
While their dedication and drive are essential for business success, we can help transform this success into a secure future for owners and their families, while managing or mitigating many of the associated risks. This series aims to show how working with financial planners like us can help business owners align their business goals with their personal financial objectives. Please reach out to discuss your situation and see how we can assist you.
In part 4 of our series, we consider – What to do with your profits
Obviously making profits is great but it gives you a decision of what to do with the money. Retained profits, or the earnings that a company keeps after paying dividends, can be a powerful tool for business growth. They can be reinvested back into the business to fund research and development, purchase new equipment, or expand operations. Alternatively, they can be used to pay down debt or saved for future use, or withdrawn from the business to meet your personal goals.
If you are retaining profits in the business how you hold them can have a significant impact on a number of areas. Obviously, whether you invest the money or hold it and cash could generate very different returns but there are also tax consequences.
Whether you use a bond or general investment account, and which type of funds you invest in can impact loan relationship rules and throw out gains and interest when it might not be the best timing for the business. There can also be potential impacts on allowances if the amount of investment becomes significant and affects the trading status of the company. One option is to migrate the business into a family investment company which in some circumstances can be a great way to hold and pass on family wealth through generations.
While reinvesting in the company to build for the future can seem like a great option, are you looking for growth you don’t need or negatively impacting the attractiveness of a potential sale.
If you decide you want to extract the funds, there are a number of different routes which can be combined together to create every different result so it is important to consider all of the options and have a clear strategy to maximise the potential benefit to you and your family.
We will explore these areas in more detail in later blogs but if you would like to discuss these please get in touch.
How can we help?
Sam Cawley and Nathan Richardson are Investment Directors and Chartered Financial Planners in our specialist Investment Management team.
Our expert advisors can not only help you calculate what you need but help you develop a comprehensive plan of how to get there, working alongside our colleagues in the Corporate team and partners in corporate finance and accountancy to deliver a truly holistic solution. There is no need to wait until you have sold your business to engage with a financial advisor, if you would like to discuss how we might be able to assist you please get in touch for a no-obligation initial chat on 0800 024 1976 or via our online enquiry form.
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This article is for information only and does not constitute legal/financial advice. Please contact us for advice tailored to your specific position. Some of the content presented on our website has been generated with the assistance of Artificial Intelligence (AI). We ensure that all AI-generated content meets our high standards for accuracy and relevance.
