Establishment of a business What is the right structure? -Ownership -v- management issues - Tax implications - Legal risks & responsibilities - The things that sometimes go wrong

1. Establishing a BusinessThe optional dynamics of structure, organisation/management and related factors Steven Janes Partner 28th July 2011

3. 33 partners and over 200 staff

4. Turnover in 2010: £13.1 million

6. Protection against business risks

7. Minimization of costs, including tax

9. Partnership

10. Limited liability partnership

12. Joint ventures

13. Franchises

14. Charities

15. Trusts

17. BUT electronic company formations has simplified setting up other structures

18. Understand costs involved in setting up and maintaining your chosen structure. Bear in mind that:

19. Corporate structures are more expensive

21. Consider if assets should be divested to protect them from creditors

23. Salary

24. Bonus

25. Benefits in kind

26. Profit shares

27. Royalties (IPRs)

29. Is the business your main source of wealth?

30. Do you want the business to pay for your retirement?

31. Do you want it to provide other financial benefits?

33. Family or friends?

34. Providers of capital?

35. Partners?

37. Profits and VAT

38. Stamp duty

39. Capital gains tax

40. Capital allowances

41. Business rates

43. Sole traders and partnerships do not carry legal protection for owners. Proprietors are personally liable for debts and liabilities and partners are joint and severally liable.

45. Personal wealth (often the only option for sole traders)

46. External sources

47. Non-participating investors (e.g. business angels)

49. Formality / regulation

50. Borders

52. Who controls the business?

54. “If non-owner managers do not feel that they possess ownership in the business, then they will be less effective managers”[Source – Linked-in forum on business management, 2010]

56. Is private equity good because it defuses conflict between owners and managers?

57. Are professional investors more detached and less emotional about the business?

58. Does professional investment inevitably lead to short-term profits over long-term investment?

60. Roles of the board and shareholders

61. How shareholders can:

62. Convene meetings

63. Influence the agenda

64. Affect board decisions

66. Suppliers

67. Competitors

68. Neighbours

69. Regulators

71. Stick to National Savings

72. Don’t go out without your lawyer

74. Selling a manufactured product

75. Giving advice

76. Winning a major new contract / customer

77. Eureka moments – new inventions

78. Marriage & divorce (aka mergers and acquisitions)

80. Keep legal documents simple

81. Put your trust in written agreements

82. Good lawyers (& accountants) are priceless

83. Don’t forget what insurance is for…

84. When assessing risk, think ‘feline’: Avoid Control Accept or Transfer

85. Steven Janes Partner steven.janes@wrighthassall.co.uk 01926 880752 Any Questions?