As accountants in Stoke-on-Trent we help our clients to protect their valuable assets.
In business we face risks every day and thankfully we can protect ourselves from most of them.
That said, many businesses trade from a single company holding all of its assets. This arrangement places the company’s future at risk should the unexpected happen, it could for example suffer a large bad debt, an un-insurable claim or worse.
If the company can’t survive such events, sadly, the company goes into administration.
So if you’ve got valuable assets on your balance sheet, it’s a good idea to think about a reorganisation. You can separate your valuable assets from the trade itself so that the trading company bears all of the risks of trading, whilst your assets are ring fenced elsewhere.
There are tax implications to think about, but they can be mitigated assuming a number of conditions are met.
Also, if you’re expanding into new markets or products, you should consider doing the same thing. Why not place your new venture into a separate entity to protect your existing trade and safeguard your assets? If the new venture gets into difficulties it won’t take your core business with it.
I worked with a company recently which had this structure:
Here, if company 2 failed, it was likely that company 3 and 4 would also fail. If company 1 failed, then all of the companies could.
We therefore put this new structure in place:
Here the individual companies are more secure if one fails, and we achieved this with no tax charges whatsoever.
I hope you’ve found this useful. If you’d like a copy of my Guide to reorganisation then drop me a line at firstname.lastname@example.org and I’ll email it to you. Alternatively, feel free to give me a call on 01782 279615.