Cash Extraction / Succession Planning
Many successful business owners spend years building a business that they are rightfully proud of and, in doing so, they accumulate significant value in the business and cash extraction becomes a concern. The question often arises as to how best they can extract this value for their own personal enjoyment.
Cash can be extracted through dividends or a salary, but these mechanisms are punitive from an income tax perspective. Likewise, while a director’s loan is another means of cash extraction, this too has drawbacks, not least the fact that it has to be repaid and is subject to taxation and restrictions under company law.
Having invested their lives growing a business, many owners often leave it too late to plan for the future, limiting their exit choices and, ultimately, failing to reap adequate rewards for the hours worked, energy burned and risks taken. A last-minute share sale or unplanned or forced retirement is not the way a successful businessperson should hope to exit their business.
A well-planned exit strategy is key to efficient cash extraction from a business. Depending on the objectives of the business owner, potential mechanisms include:
- Voluntary liquidation
- Share buy backs/redemption
- Share transfer
- Business sale
- Share for share/share undertaking
Our team can help navigate these options and determine the most suitable strategy for your unique circumstances.
How We Can Help
We can work with you to help your clients develop their exit plans in good time and, if desired, structure an exit that is beneficial for both the person leaving the business and those remaining.
Our accountants at OmniPro apply their unique blend of taxation and company law expertise to advise clients on the cash-extraction mechanism that best suits their needs, while making maximum use of retirement and entrepreneurial tax reliefs in compliance with legislation.