Business owners focus most of their time on building, managing, and growing their companies.
Taking care of their personal financial planning is equally as important, but often ignored.
Investment, Pension, Insurance, Tax, and Estate planning are complex matters. A quick high-level overview of some of the main topics which your financial adviser can help to plan and arrange would include the following:
Protecting your Income
Employment income is the bedrock of family finances. Employees of the state and large corporations usually have income protection insurance built into their employment contracts. The same cannot be said for self-employed business owners / directors who need to take out adequate income protection cover in case of long-term illness. To cushion the cost, premium payments can qualify for tax relief.
Co-Director / Keyperson Insurance
Most companies in Ireland are small enterprises. The illness or death of a director or key employee can be devastating to the continuation of the business. Various types of business insurance along with proper planning can help protect the economic viability of the company, remaining directors, and the dependents of a deceased director.
Investing Surplus Company Funds
Surplus cash not required for ongoing business operations is often left on deposit at a bank. The purchasing power of that cash is eroded by low deposit rates and increasing levels of inflation. There may also be a tax surcharge on certain undistributed income held on deposit. Setting up a corporate investment account might be an appropriate solution for companies in this situation.
Funding your Pension
Pension planning is often put on the ‘long finger’ by business owners. In addition to providing long-term financial security independent of the business, pension funding is a smart way to transfer pre-tax company earnings to personal wealth. Company directors without a pension can potentially arrange for the company to transfer many multiples of their annual salary as a once-off pension contribution to make up for unfunded prior years.
Drawing down your Pension
Deciding how and when to begin pension drawdown requires careful planning. Depending on the structure, it can be possible to begin drawing down pension income as early as age 50 or as late as age 75. Retiring a pension scheme doesn’t necessarily mean you cease work. It can also be arranged to stagger drawdowns at different ages depending on need, tax implications, estate plans etc. Investments held in the pre-retirement pension accounts can carry over into the post-retirement accounts (including property).
Each of the above topics requires proper planning at the outset and ongoing management as part of the annual review process.
Ardbrack Financial Limited
Disclaimer: The content of this article is for general information purposes only. It does not constitute tax or investment advice as it does not take into account the investment objectives, knowledge and experience or financial situation of any particular person or persons. You are advised to obtain professional tax and investment advice suitable to your own individual circumstances. Ardbrack Financial Limited makes no representations as to the accuracy; validity or completeness of the information contained herein and will not be held liable for any errors or omissions.
Ardbrack Financial Limited is regulated by the Central Bank of Ireland. Registered Office: 5 Guardwell, Kinsale, Co. Cork, Ireland Tel: + 353 21 4773833; Registered in Ireland: Company Number: 569286, Directors; J McWey, M McWey