How to Protect your Business #AskAMS

Here are a few of the things that small business owners often overlook.

As well as obvious things, such as: the physical security of your business, its financial security and its data security, you should ensure that you have good IT support and internet security; the necessary insurances (including Cyber Insurance). Also it makes sense to have a solid Business Continuity Plan; good locks/alarms/security staff etc.

You would be wise to also consider:

The structure of your business

Limited liability: Trading through a Limited Company (or a Limited Liability Partnership) means that your personal assets – home, savings etc. – are protected if your business goes bust.  For many businesses this is a real risk, so having Limited Liability would be absolutely vital.

Limitations of Limited Liability: Although any personal assets outside of your Company are protected in the event of your Company failing; when the tools of your trade are owned by your Company then it can mean that you will lose them and possibly your livelihood – which in turn puts your personal assets at risk if you can’t then pay your mortgage etc..  However, if expensive trading assets – buildings, vehicles, plant – are held by you personally and rented to your Company, should your Company go bust, you can still keep your trading assets. This could then enable you to recommence trading, more or less, right away.  

Share structure: It is often tempting to set up a Company’s share ownership structure in the most tax efficient way – and accountants earn their money doing this for their clients.  However, it is important to remember that shares mean votes and control (not just dividends) so giving away shares to save tax may ultimately prove a lot more costly than any tax savings if shareholders fall out with each other.