Knowing this, ask yourself: what would happen to your business and/or your family if something were to happen to you and you were unable to work?
When you run your own small business, it is critical that you protect both your asset and yourself in the event that unforeseen circumstances arise.
To adequately protect yourself, your business and your family, there are a few steps you can take, including:
Step 1: Make superannuation contributions
When you are working for yourself, there is no employer making consistent contributions to your superannuation. Some small business owners refrain from putting money into their superannuation account and instead believe the eventual sale of their company will act as their super and help fund their retirement. However, this can be a costly mistake. For example, you may not be able to sell the business at your chosen time and when you do, it might not sell for the value you were hoping for. It therefore makes sense that you contribute regularly to your superannuation to safeguard for the future. Speak to your Mortgage Choice financial adviser about the taxable benefits of making regular superannuation contributions.
Step 2: Take out adequate insurance
You should ensure that you take out adequate insurance to protect your business. As a small business owner, you are very likely to be a ‘key person’ within the business. A ‘key person’ is someone a business needs in order to run successfully on a day-to-day basis. Of course, you may not be the only key person within your business. Indeed, you may have a co-worker or business partner who may also be a key person. Regardless of who your key persons are, you need to make sure your business is protected in the event that any of the company’s key people are no longer able to work. Our Mortgage Choice financial advisers can help identify which insurances you and the business may need, as well as the amount of cover you and the business should have. There are a range of different small business insurance policies that can be tailored to match your needs. The type of insurance you take out will depend on the type of business you run, how it is structured, its size, and your industry.
Step 3: Keep your personal and business assets separate
It is advisable to keep your personal assets and your business assets separate by creating individual bank and credit card accounts. You will be able to track your day to day transactions clearly, without the need for figuring out which purchases were for the business and which were for personal expenses. Drawing a distinction between the two is also particularly helpful when you’re completing your tax return. It is also advisable that you try to use business assets as securities for business loans rather than using personal assets.
Step 4: Have a succession plan
You may not feel this way now, but there will come a time when you have to leave the business. A succession plan will outline how you will transition out of your business smoothly and who will take over it. The plan should be realistic and achievable and it is a good idea to do this with the assistance of a financial adviser and a lawyer. By planning ahead, you can maximise the value of your business and prevent disruption over the longer term.
At the end of the day, you have taken the time to build a profitable asset – you have poured your blood, sweat and tears into the business – so doesn’t it make sense to protect yourself and the asset you have worked so hard to create?
If you are serious about protecting yourself and the business you have worked so hard to build, then speak to us today. Our Mortgage Choice financial advisers can help you with all of your insurance needs. Don’t get caught short – protect yourself, your business and your future today!