Being in business isn’t for the faint hearted yet many are flying solo and doing well, full credit to them – go you good thing. When things are good all is good, it’s when a problem occurs that the wheel can come loose. Below are a few things that should be on your to-do list, this is not a comprehensive list but it’s a good starting point.
Talk to your Lawyer, Accountant & Insurance Advisor
Ask them for your regular “no cost” chat, if they don’t provide this then maybe time to shop around. Ask them what you should have in place, yes they’ll try to sell you some product or services, heck we’re all in business, but some good things may come from the chat that you haven’t considered and may need. It’s worth your time.
Enduring Power of Attorney
If you are in business and something happens to you (why just yesterday I got a paper cut) and you are unable to make decisions for your business what is going to happen to your business? Who can authorise rent, supplier payments? Who can deal with your landlord, bank, lawyer, accountant or suppliers?
Ok you may be in a business with other people, do they have authority to make decisions? Do you want them to be able to make all the decisions?
Choose somebody you can trust, has a business brain and who will not be bullied and give them Enduring Power of Attorney over your business affairs, they can keep things ticking along until you’re able to make such decisions for yourself again.
Insurance and ACC
Your insurance and ACC need to be handled as one entity to make sure that you get the best out of both whilst paying the smallest premiums, your business needs cover for errors, accidents and loss of income (in its various forms). Note that ACC covers just injury and not illness and needs to be structured properly, check you are on the correct code, you are on the best ACC product for your business activity (tradies and contractors this is particularly relevant to you) and if you have comprehensive alternative insurance you don’t double pay for the same cover.
Terms of Trade, Partnership Agreements & Supplier Agreements
Remember “it’s easy to get into bed but it’s harder to get out”, when you bring on a new client, bring on a business partner or welcome a new supplier things are always happy and fun, when problems occur that’s when paperwork saves you a lot. Yes it costs to get things drawn up but not nearly as much as having to write a debt off or close down the business due to a disagreement. With a business partner it may not be a falling out but if one gets sick and unable to work, what rules are in place for payments, who gets what and under what circumstances.
If you die without a will in place, the painful sounding official term “intestate”, the law takes over and decides who gets what. This can be a lengthy and expensive process which people can challenge leading to more time and costs. The outcome may not be what you may have wished. A business can go under during this time, all your hard work to build the business as a retirement or legacy could disappear for want of a will.
Much maligned and misunderstood, a Trust is still a valuable instrument to use and has its place but be very clear (a) why you need it and (b) what you want it to achieve. For a while Trusts were the sexy new thing everybody must have, be aware that they cost to set up and maintain (you really need to maintain a Trust or it’ll fall over when challenged) and there are legal and tax implications around Trusts that need to be understood. They have their place and they are very good when used properly.
Take a bit of time and slowly work through some of these things, not all will be applicable to your business but at least you can tick them off. They are the fence at the top of the cliff not the ambulance at the bottom.
© Hughes Judd Accounting Ltd June 2016