For any successful business, consistency is key. Ensuring the operation runs smoothly and that continuous growth is made, is integral to the longevity of any company. As an owner of a business safeguarding your company’s future is almost as important as running it day to day. Following recent statistics, last year’s reports saw a huge surge in the amount of mental health cases occurring in adults. This unfortunate news has highlighted the importance of ensuring best practices are in place, not only for people but for businesses too, to ensure that their future is safe.
Have you ever considered that if you ever, unfortunately, fell ill and lost the mental capacity to conduct your role, what would happen? Depending on your field, an occurrence like this could leave you, your staff and your business in major deep water. The aftermath in regards to the amount of hassle caused to friends, colleagues, and families who must seek legal help to gain control of the finances and power can be a highly stressful and drawn out process. In this scenario, a property and financial affairs lasting power of attorney (LPA) will grant a specific person, people or attorney to look after things for you while you’re incapacitated. If, however, you fail to get an LPA in place, it will mean the person who needs to take over will have to apply to the ‘Court of Protection’ to obtain an ‘Order of the Court’. The judge at hand would then have to make the executive decision on who should take care of your property and finances.
This is a process that could take months and cost thousands, which could greatly harm your business’ future, highlighting the great importance of getting one sorted. So, if this applies to you, here’s exactly how it will affect your business.
Limited Company
If you’re operating out of a limited Company setup, typically dual roles of a director or shareholders and what happens in case of incapacity will depend on the conditions of shareholder’s agreement. In relation to shareholders, LPA’s work when an attorney is appointed to deal with the shares that you hold but when it comes to the director side, it works a little differently. As directors aren’t legally allowed to delegate their role or duties under a power of attorney, it means that the other directors must make decisions on their behalf (if applicable). If, however, you are a sole director you need to decide on the day to day obligations in your absence and whether you can pre-designate roles or alternative directors that can be used to cover different situations.
Sole Trader
A lasting power of attorney is crucial if you’re a sole trader. If this applies to you, then please take note. As a sole trader, your business will have no legal status separate to you as the owner, meaning the business is in your hands only. Without an LPA agreed, your family (if applicable) won’t be able to run the business or bring it to a close legally leaving it in a purgatory like situation until control is granted (a process that can take up to a year). By this time, rent, leases, bills or payments will still be due and as the owner, they are personal debts to you. What this means is, is that if you are unable to pay it may lead permanent collapsing of the company and even bankruptcy.
Partnerships
If you’ve entered into a partnership, what will happen will be down to what’s stated in the business partnership agreement. Similar to the sole trader route, as you’re not incorporated the business doesn’t have an independent status away from you as the owner. Therefore, an in-depth agreement needs to draw up to outline procedures and responsibilities should incapacity occur. If an agreement isn’t in place, an LPA will enable your solicitor at hand to manage the business with only a short break in continuity, which will also help your co-partner continue in their daily obligations. If you do not have an LPA or even an agreement in place, your life partner won’t be able to control your business affairs. All assets will then be assumed dependent on will wishes.
Therefore, if you haven’t already, getting will solicitors to get your affairs in order and in place is must. The effects of reduced or no activity will only cause damage to the business, your business finances as well as your families – and you don’t want to leave the people you love in debt and left with the burden of sorting out matters they have little knowledge on. An LPA is one of those little things that you put off because you disregard that anything will happen to you, which is highly irresponsible as a business owner as its your loved ones or business partners that are left to deal with the mess. So, stop putting it off and safeguard your business today but it’s too late.
