If you’re a business owner, it’s quite likely you have dependents relying on the income that your business brings in. You might have protected yourself in the form of Life Insurance or Critical Illness Cover.
But have you protected your business? What would happen to it if you become incapacitated? Who would be capable of making business decisions on your behalf?
Having a Business Lasting Power of Attorney (LPA) in place could give you peace of mind that your family and your business would be looked after, should the unexpected happen.
What is a Business LPA?
Simply put, a Business LPA is a legal document where you authorise a chosen person to make decisions regarding the business on your behalf. This person, in legal terms known as your ‘attorney’, will be able to act in your stead if you’re unable to make decisions for any reason.
A Business LPA is not just useful for when an accident occurs, or serious illness strikes. It also empowers your attorney to make important decisions – for example, while you’re away on holiday. This means your business can keep running smoothly and you won’t have to worry about any disruption to your time off.
A Business LPA can empower your attorney to make a range of decisions including:
- Paying wages, tax, or VAT
- Managing of business assets
- Hiring new employees
- Purchasing or selling property
- Managing Health and Safety issues
Here are the top five reasons why you should consider getting an LPA for your business.
1. You can choose someone who you trust
The choice of a suitable attorney can be a tricky one, and your decision can have a colossal impact on your business.
You have complete control over this decision, so it’s important to give the issue some thought and choose carefully.
It goes without saying that you should make the choice based on competence, not loyalty. Your attorney may have to make tough decisions, so it’s important to choose someone whose judgement you know you can rely upon.
Once you’ve chosen a trustworthy and dependable candidate, you can rest easy knowing that your business is in safe hands.
2. You decide what decisions they can make
One of the advantages of setting up a Business LPA is that you have complete freedom over what decisions your chosen attorney can make on your behalf.
While you can empower them to make the business decisions listed above, you don’t have to grant them any that you don’t want. Although it can be wise to give your attorney all powers to act in your stead, you can choose not to.
If you own multiple businesses, you can organise separate LPAs to appoint several separate attorneys to manage each business, instead of hiring one to manage them all.
If there are any areas of your business that you feel are too important for anyone but you to handle, you can be assured that you and only you will be able to deal with it.
3. Having a Business LPA saves time if disaster should strike
If you don’t have an LPA for your business and you lose the capacity to make decisions, you would have to appoint a deputy through the Court of Protection.
This can be a lengthy and potentially expensive process since you’ll need to pay a solicitor’s fees. On the other hand, as of August 2020, a Business LPA can cost as little as £82.
Organising an LPA for your business lets someone you trust take the reins from the moment that you’re unable to make decisions. Even if you don’t plan on using it, it can be extremely helpful to have just in case.
4. Your suppliers, contractors, clients, and employees will have the benefit of the company continuing to run smoothly
As the business owner, you have a lot of people who are relying on you. If your business should grind to a halt for any reason, it could affect a lot of lives.
If your employees were unable to get paid due to a lack of access to your business’ bank accounts, it could have a massive impact on their families. Especially so if they have debts, such as mortgages, to pay or dependants who are relying on them.
Issues with the business could also affect your clients, suppliers, and contractors. Not having a backup plan in place could show a lack of professionalism that might make them less likely to work with you in the future.
Having a Business LPA in place means that if the worst should happen to you, there will be no disruption to the wellbeing of your company and the people who rely on you.
5. You will have peace of mind that your family will continue to be looked after
Having an attorney ready to step in at a moment’s notice if you were unable to make decisions means that you can rest easy knowing the financial future of your company is secure.
This means that, even in a worst-case scenario, the business would continue to run, and your family would be able to support themselves.
Having a Business LPA in place can give you the certainty that a person you have full confidence in will look after your business interests during a time of instability.
Get in touch
If you’d like to discuss the impact of any potential changes on your finances, get in touch. Please email email@example.com or call 0115 933 8433.
The Financial Conduct Authority does not regulate tax advice. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.