.jpg)
What if something happens to you?
The success of your business depends on you but what if something happens to you? What happens to your business … your future … your family?
When you are running a business, large or small, you are everything from the engineer to the cleaner, to the director and quite possibly the last thought on your mind is how to protect your business in the event of something happening to you or your partners.
Are you in partnership in business? If so, have you ever considered how your business would continue if you all were not involved?
If you have a business with one or more partners and one of them were to pass away or become permanently disabled, partnership protection and buy/sell agreements would ensure that the surviving partners could buy him or her out and ensure their family …and yours … is well looked after and the business continues.
Partnership protection is another form of business succession, only this time protecting the individual partners within the business.
So if any of the partners die, become disabled or are diagnosed with having a critical condition, the surviving partners will be paid out with an insurance and these funds can be sued to re train a new partner and also to buy out the deceased partner’s share of the business from their estate. This way the deceased partners estate will receive the liquid value of the share of the business share of assets and the surviving partners will retain 100% of the business without un welcome partners interfering in your business.
This way the deceased partners estate will receive the liquid value of the share of the business share of assets and the surviving partners will retain 100% of the business without un welcome partners interfering in your business.
At Coast Financial Planning on the Gold Coast and in Hervey Bay we have seen too many times business’s folding due to not been able to buy out a deceased partners share or indeed new partners been involved that may have different work ethics. We will give you a clear idea of how to go about this and how to protect you and your business partners.
Details of the partnership protection are usually put down in the partners individual wills and usually have first refusal on the purchase of the deceased share of the business.
As the partners own the individual insurance policies on each other and the business do not own them, the premiums for the insurances are paid by the partners, not the business and therefore are not tax deductible.
Our financial advisors on the Gold Coast and in Hervey Bay will sit down with you and your partners and see if this is the way for your business to be insured. We ensure you receive best advice at all times and offer a continued after service. This means we will review your circumstances each and every year to ensure you are on the right tracks not just now but in the future also. As and when your business changes we will be along your side to offer the continued right financial advice.
Do you run your own business or do you have key employees working for you?
What would happen if your key employee were to be taken seriously ill or even die, would your business continue without them?
If any of the above relates to you, then it is worth taking a look at Keyman Insurance. Keyman Insurance protects your business if you have a key person in your business who contributes greatly to the cash flow or has a great skill set purposely employed for that skill for your business and that person stops working for you.
Keyman Insurance is a business succession plan where by the policy pays out when a Keyman of the business dies, becomes totally disabled or suffers a critical illness and is no longer able to work for your business.
A Keyman of your business generally either creates a revenue for your business or has given a loan for the benefit of your business.
A good example of a Keyman as follows:
If the purpose of a Keyman Insurance policy is to cover the revenue generated by that keyperson, then the premiums will be 100% Tax deductible. This means you can claim back tax on your premiums each year.
The amount of cover required for the Keyman is generally linked to the amount of revenue your key person generates for the business. For example if your key person generates $500,000 a year for your business, then the cover for that key person will be $500,000. This allows your business a full year’s income to replace or train another key man for your business.
At Coast Financial Planning here on the Gold Coast and up in Hervey Bay we ensure you receive the right advice for your circumstances. If you have a Keyman in your company ensure he is covered to ensure your business is safe against all odds.
Business succession is an integral part of maintaining your business if the unexpected happens to either you, your business partner or key people within your business.
Two examples of business succession are:
Keyman Insurance – The ability to protect the key revenue generator within your business so if he/she were to die, become permanently disabled or be diagnosed of having a critical illness and be unable to work within the business again, the company can be paid a lump sum equal to a year’s revenue the keyperson would have generated. This allows the business 12 months to decide what to do next e.g. replace the key person, sell the business etc. etc.
Partnership Protection – The ability to protect your business partner so if he/she were to die, become totally disabled or be diagnosed of having a critical illness, you would receive a tax free lump sum to be able to buy out your business partner’s share for their estate and therefore you do not receive any new unwanted business partners as does happen from time to time. At Coast Financial Planning, we help and advice on the best and most tax efficient way of setting up a business succession plan for you and your business, giving you peace of mind knowing that all the hard work in growing your business does not go to waste because of elements outside of your control.
