Protecting what really matters ... getting the right corporate structure
When business is booming and cash-flow is healthy, worrying about your corporate structure (i.e. how your business’s trade and assets are arranged) is probably one of the last things on your mind. However, the recession has recently brought this issue into sharp focus!
If business owners take one thing from the difficulties of the last 12 months it should be that, when things do go wrong, protecting what you have is of key importance. It is possible to avoid losing everything, when and if the business starts to fail, by arranging your trade and assets accordingly; but taking the right advice is crucial.
Businesses often carry out more than one trade, and own a wide range of both trading and investment assets e.g. land & buildings, licenses, intellectual property rights, or vital equipment and tooling. This is becoming increasingly common in today’s diverse business environment. However, it is equally common for businesses to carry out all their trade and hold all their assets in the same individual company.
This “corporate structure” is likely to have arisen from the historical development of the company over time, and is often seen as being a nice and simple way to do business.
However, major problems can arise if the business gets into difficulties. If every type of trade and every asset is held in the same company, there is no way to segregate key assets, or protect profitable trade from the failing parts of the business. The recession has seen many cases where the bad parts of the business bring about the collapse of the good parts, and everything is lost. For example, land & buildings may be seized to pay off the trading debts and the owners are left with nothing. It doesn’t have to be this way.
We can help you to arrange your assets and trade accordingly. Through careful planning we can design a corporate structure to segregate and protect key parts of the business. For example, it may be appropriate to split your business into a group of separate companies, which can individually hold key assets or carry out differing trades.
The arrangements can be complicated and will not suit every business, so getting the right professional advice is vital. Whatever your reason for wanting to get the right corporate structure in place, if protecting your business is something that you would like to explore then please contact us to arrange a meeting.
