Most business owners should have a disaster recovery plan for their business if say, the office building was burnt down or there is a computer system meltdown in the office. Yet how many businesses have a disaster recovery plan in place in the event a sole director or a partner of the business loses mental, physical capacity or dies? Russell Hallam, Managing Partner, Turbervilles Solicitors gives some top tips to small business owners to protect their business:
Without a contingency plan for loss of mental capacity in place, an application would have to be made to the Court of Protection for someone to be appointed as your deputy. The downside is the process can take months and the costs involved can quickly mount up. Most important of all, if you are the only person sanctioned to pay staff or suppliers whilst the issue is being sorted out , your business could cease to operate.
What contingencies one puts in place to safeguard a business will depend on the structure of your business.
Sometimes the best plan to draw up a “Lasting Power of Attorney”. This is a document which allows you as the business owner to appoint someone to act on their behalf; and have this appointment registered with the Public Guardianship Office. One or more attorneys can be appointed and can act together or separately. If your business is incorporated – you may need to put a directors LPA in place alongside a review of the Company’s Memorandum and Articles of Association or consider alternate directors. Remember to:
- Take your time to choose the right attorney(s). You may have spent years building up the business so take time to consider who would be the best person to make the day to day decisions should you ever become incapacitated. Is that person familiar with the business already? Will they have the right skill set? Even if they aren’t familiar with the business or have the skills, you may decide to appoint someone who you trust to ask the right people to make the day to day decisions for the business.
- Most businesses will have an accountant, so an attorney can seek advice about finances and running the business at the start if need be before employing a new director/manager
- Most of us have drawn up a will so that in the event of our death any personal assets and responsibilities can be divided without contest. Make sure you do the same for your business. In the event of your death, would you want the business to be sold? Or would you want specific employees or family members to takeover? Who would receive shares and what would the division be?
- You may continue to run your business for another twenty or thirty years, but by planning ahead you can have peace of mind that should adversity strike before then, your business affairs will be settled according to your wishes.
For more information or assistance, please contact Russell Hallam on 01895 201 700