The Orca Financial Guide to understanding Business Protection
Why would I need Business Protection?
If you’re in business, you know the importance of insuring it against loss from fire or theft. However, there are other circumstances that can have damaging and lasting consequences for your business. Indeed, without the right kind of protection, your business, and your family’s finances, could be jeopardised.
Why kinds of protection or insurance should I consider?
This allows a limited company to plan for the potential financial loss that it would suffer on the death or serious illness of a key employee. For example, would loans to the business have to be repaid on the death of a specific individual?
This allows the shareholders of a limited company access to funds in order to purchase the share of a deceased shareholder. These funds are provided through Life Assurance contracts, with the company paying the premium.This ensures the surviving shareholders retain control of their business.
Corporate Shareholder Protection
With this arrangement the company agrees with each shareholder to buy back his shares from his personal representatives on death. The insurance cost is covered by the company. This offers security for the business and peace of mind for the family/dependants of the deceased.
Gift or Inheritance Tax Planning
It’s a good idea to plan in advance for any tax liability which could arise on the transfer of a business upon death. Having a plan in place can ensure that the business won’t have to be sold off to pay inheritance tax or gift tax.
- Will I be able to pass my business on to my children intact without it being ravaged by tax?
- How will my family survive financially in the event of my sudden death?
- How would the business survive in the event of my sudden death or the death of a partner?
- What would happen to my income in the event of a long-term absence from work due to illness?