Small business owners in Wales are putting their retirement pot at risk according to a leading insolvency expert. Alun Evans, Partner at Bevan Buckland LLP in Haverfordwest warns that business owners are gambling with the health of their firm, by making poor arrangements for the smooth sale of their business.
There are an estimated 200,000 SMEs in Wales underpinning our economy, employing around 1 million people and showing a great deal of entrepreneurship. But lack of exit planning can be fatal to those business and can put those workforces in jeopardy, Alun warns.
Alun Evans says: “Around 99 percent of businesses in Wales are SMEs. There’s been a growing number of companies that have developed into successful and profitable businesses. But any achievement is undermined when SME owners try selling the business because of a lack of detailed thought into exiting the firm. This issue has been exacerbated by the upheavals of the pandemic, which has led to many business owners now hoping to retire earlier, but many find their businesses are wholly unprepared for sale.
Alun adds: “Succession planning can be an emotive topic, comparable to writing a Will. It is both advisable and entirely necessary, but it is one of those things people shy away from doing because they don’t want to think that far ahead.
Where succession or a business sale is not possible a business owner should consider Business Asset Disposal Relief linked to a solvent members voluntary liquidation. This is a scheme which enables some businesses owners to pay less Capital Gains Tax when they dispose of all or part of a business. This may allow any assets locked in a company to be distributed to the owner at a tax rate of only 10%. Professional advice on all of these things should be sought by a financial expert.”
Alun concluded: “Many savvy business owners will have drafted their operational policies and procedures. Neglecting your exit plan can put your retirement hopes in jeopardy. It can also lead to uncertainty and perhaps even job losses for staff, so we always recommend to plan ahead.”
Bevan Buckland LLP is the largest independent accountancy practice in Wales providing practical support and strategic accounting and tax advice for small to medium-sized businesses. Headquartered in Swansea, the firm has offices in Cowbridge, Carmarthen, Pembroke, Haverfordwest and St David’s.