Understanding Estate Planning As A Small Business Owner
As a successful business owner, you have more pressing issues than ‘estate planning’. You might have life insurance and you are growing your business for yourself but also for your family and their futures. So, you should take a moment to understand how inheritance tax will impact you and your business.
What Is Inheritance Tax?
Inheritance tax (IHT) is different for personal property and business assets. There is a clear separation. HMRC will treat different assets owned by different entities with different rates. IHT is only payable on an individual’s estate above a threshold of £325,000 when it will be taxed at a rate of 40%.
As you grow your business, you could be injured, suffer an illness or even undermine the lifetime of hard work you have invested in your company by not planning for certainties. As they say, you can avoid a lot except death and taxes.
The Basics of Estate Planning – Get A Will
Estate planning at its simplest is about having a basic document that outlines how your business will be run once you are not around to run things. Your company is your pride and joy and you should consider how it will be posthumously managed.
The will should specify how your assets should be distributed and shared upon your death. This includes your personal assets and your business assets as well.
One key area of will and estate planning is to identify whether your business qualifies for Business Property Relief (BPR) and you should identify areas in which you could exploit legal tax planning opportunities to help drive down your liabilities.
What Are Your Wishes For Your Business?
Your will is also your “succession planning document” for the longevity of your business. If you sadly pass away without this document, this could leave your family and loved ones in a very difficult position. So, by outlining your succession plans you can make life easier for your family and business colleagues.
Another key area of concern is that without the correct succession planning pathway you could make it even more difficult for your loved ones – who now own your company – to sell it should they meet your original exit strategy requirements. Therefore, identifying your succession planning strategy within your succession planning documentation is crucially important.
Prestige Business Management Can Help With Estate Planning
We can help with inheritance tax and other tax simplification advice. Why not get in touch with Prestige Business Management today on 0203 773 2927! Call us to discuss your business estate planning and documentation needs now.