A Fresh Start!June 16, 2011
Our guest columnist Joe Lazzara from Borrello Legal provides some insight into what aspects business owners should consider in the new financial year
For many businesses, New Year’s resolutions come in July. June traditionally signifies the end of the old financial year and the preparations for the new – although, good practice dictates that planning for the new financial year would have started much earlier than that.
Not only will business owners be working in their business, but this is also a good time to work on their business and their own affairs. This is a time when the business owner, their business advisor, accountant and (sometimes) lawyer need to work closely together to ensure that they know exactly what they’ve done in the financial year that is coming to an end, and importantly, where they are going in the new financial year. It is a time for analysing budgets and financial reports and preparation of new budgets.
It should also be a time, however, to commit to reviewing all of the documentation that is used in, and supports, the business to ensure that it is not only reflective of how you are actually doing business but is currently compliant with any governing legislation. For example, are your current standard terms and conditions of supply reflective of the way that you do business? If your documents say one thing, and you do another, you could be asking for disputation.
In many partnership-type arrangements (such as partnership agreements themselves, shareholders agreements and unitholders agreements), the owners’ succession planning is supported by buy-sell arrangements between the owners which are, in turn, underpinned by the requirement to take out insurances over the lives of the owners. This usually requires an annual review of the amount of those insurance policies, so that in the unlikely event of the death or TPD of an owner, that that owner’s family gets a fair value for that owner’s interests in the business.
In franchise systems, the beginning of the new financial year can trigger the review of various fees and levies due to the franchisor. Has that review been undertaken?
In premises-based businesses, the lease may allow for the recovery of outgoings and percentage rent by the landlord. Traditionally, July is the time when those calculations will be made. Have you factored in how much this will cost your business?
Finally, owners should review their own personal circumstances including their own personal succession arrangements. Everybody knows it is important to have a Will to deal with their Estate once they die. Have you got a Will? If not, you should get one. If so, how long since it was reviewed? Does it cover all of your assets, including your business assets?
A Will only kicks in upon death. Who manages your affairs when you may not have the mental capacity to make your own decisions? This is a time when consideration should be given to getting an Enduring Power of Attorney (allowing the Attorney to deal with legal and financial matters) and an Enduring Power of Guardianship (allowing the Guardian to deal with health and well-being issues). These documents fill the gap between the time you have your own mental capacity to make the decisions for yourself and when you don’t. Without them, it can be the case that decisions are made by a person that you do not trust to manage your affairs or that does not know enough about your affairs to manage them in the way that you would wish them to be managed.
These are exciting times. As always there is lots to do, but make your “New Year’s Resolution” a commitment to make sure your interests are protected.
For more information visit http://www.borrellolegal.com.au/This entry was posted in Business Strategy, Finance. Bookmark the permalink. ← Right Advice for Great Opportunities It’s better to be looked over than overlooked →