Choosing a business structure is very important and the effects of your choice can have far reaching effects.
Several years ago a couple came to see me regarding their financial affairs. They had both retired and received large payout figures. As both were reasonably young they did not feel they were ready to quit the workforce so they decided to join the ranks of the self-employed business community.
They spoke to several professionals and obtained advice. I gave them information and suggested a certain form of action; the business structure was one area of concern to me. They felt more comfortable with another form of advice. This is what happened.
- They purchased a nursing home
- They were advised to form a partnership
- They paid for good will
- They signed a lease in their own name
- They signed a long lease
- The building was not checked
- Their personal assets were not separated from the business
- They did not use a solicitor
- Then the wife become very ill
- The building showed signs of needing repair
- Business went downhill
- They had to sell the business
As the business deteriorated I was called in and asked to offer suggestions on how best to solve the problem. Unfortunately, there were no safeguards put into place at the beginning. At the age of sixty and sixty-one respectively they lost their security.
This is not an isolated case. I am not saying that any business structure is preferable to another; however, you need to know your options and the affects of those options on other aspects of your financial security.
When deciding on a business structure that will meet your financial and any other specific requirements you have, you will need to think about what you want to get out of your business now and in the future.