How to Protect Your Business from Employment Tribunals and Over Zealous Tax Collectors
Today it is more important than ever to protect your business assets. You have to protect your business income and the assets used to generate that income from the many threats that face every business owner.
Threats can include:
We all know, as business owners, that employment law is there to protect the employees. Disgruntled employees know this too and will often use he Industrial Tribunal process to get ‘free money’ from their former employers. It’s all too easy to claim discrimination or harassment in the current climate with little evidence to back up claims.
Unexpected Tax Liabilities
Tax regulations are ever more complex and nobody can possibly understand all of them. Even HMRC struggle to get a full grasp of the complex rules they enforce. You can easily be hit with an unexpected tax bill you haven’t budgeted for. This could be for employee benefits, corporation tax, VAT or an array of other taxes and duties.
We’ve all been there. There are so many demands on your precious cash resources but your business is seasonal or your biggest client is taking longer than usual to pay. That doesn’t stop your own creditors from demanding money. Your employees need to be paid on time. Cashflow hiccups are common in business and you need to have your affairs structured properly to deal with them.
Bad Debts are ever more common. Recently large companies like Carillion have gone bust owing creditors hundreds of millions. It’s one of the most frustrating causes of cashflow problems because you’ve done the work, bought materials and paid your employees. Yet, you’re not going to be paid through no fault of your own.
Have you ever had a dispute with one of your suppliers? They’re demanding that you pay many times what you agreed to. The dispute goes legal and you’re hit with more expenses for hiring lawyers, not to mention how time consuming it is to fight legal battles.
You can protect your business against all of these threats by compartmentalising.
This is a structure where you will have different parts of your business holding your assets and liabilities.
For example, if you own a property that will be held by a non-trading company so that it can never be attached by a creditor.
Your employees will be employed by a payroll company with no other assets in it. Any employee disputes or tax disputes regarding employees will rest in this company which will own no assets.
A third company could trade with your customers so that debts owed to your company are fully protected.
Your company’s cash balances could be held in yet another company to protect those from any legal disputes.
These structures require a bit of effort to set up, but it’s worth doing it well in advance of any business problems. This kind of insurance is not available at any price after the storm begins.
Fortress Restructuring can help you set up the structures described in this article. We have decades of experience of protecting business and personal assets from creditors.