Planning change? Structuring for success.

Looking at changing your business in 2022?

Whether you’re planning new things in the new year or looking at your options for further in the future, reviewing your structure now can make a big difference.

After what’s been a tumultuous 2021, change is afoot at many companies. No matter what you are looking at – from growth and expansion, to restructuring and succession planning or even moving gracefully on – having the correct business structure in place is one of the most important aspects of running your business.

“Your structure influences everything from operations to taxes and how much of your personal assets are at risk,” says Maurice O’Brien, manager. “Reviewing your business and legal structure pre-year-end will ensure you are operating under the most advantageous structure in the new year.” 

If successful sole traders, for example, are paying Income Tax at the higher rate on profits it may be more tax beneficial to run as a Limited Company.  “It isn’t too late to discuss incorporating into a limited company before Christmas – we can have your Sole Trade incorporated and set up as a Company for the new year.”

Going strong in 2022: growth challenges and CGT

Is your company structure positioned for growth? If you are looking at progressing, buying another business or expanding the business in 2022, now is time for a financial health check as well as reviewing your legal and business structure options.

What funding could be available for growth and is your company structure positioned to take advantage of it? A full review will ensure you’re best set up to take advantage of every option available.

If you are currently running a Limited company with the opportunity to grow it is important to have the most tax beneficial company structure in place before succession is considered. Incorrect structuring comes at a real cost – it can be the difference between paying Capital Gains Tax at 33%, 10% or perhaps not at all, explains Maurice.

The standard rate of CGT is 33% and doesn’t just refer to the sale of an asset for money – it includes any transfer of ownership by way of exchange, gift, or settlement on trustees. If the correct succession plan is put in place well in advance, two options to mitigate any CGT liability are Retirement Relief and Entrepreneur Relief.

There are a number of conditions to meet before you can claim. So it is very important that business owners are aware well in advance so they can ensure that the conditions are met before they retire, and they can avail of a lower CGT rate of 10%. Or, if planned correctly, there may be no CGT liability to pay.

Retirement, succession and selling: making a graceful exit

Whether you’re planning for family succession or your own retirement, Maurice’s key advice is to get the facts right now instead of leaving it until later.

It is vital that expert advice and preplanning is done before succession. Make sure everyone involved in the business understands and agrees so there are no costly surprises.

Otherwise you’re running a risk that those people earmarked to take over the business might not have the required skill sets – or even want to do so. That could leave you and the business in a tough situation; you might be against the clock to avail of retirement relief.

Plan well in advance with the family and, most importantly, with your accountant and solicitor. Be aware of all the legalities, conditions and reliefs that are in place. 

A professional review will ensure that the correct structures are place so that the business and all the individuals in any potential succession or growth are aware of their roles and responsibilities.

If you are selling, accountants can help you get your company’s financial records in order. They can showcase your business in its best light and tell you what it’s worth, as well as talking to potential buyers.

Planning for 2022 and beyond

Whatever stage you are at in your business journey, talking to a specialist will help you understand all your options so you can take the best next steps forward.

“Accountancy firms are more than just accounts and auditing services. We offer broad advice on issues like the decisions currently facing owners of SMEs,” said Paul O’Donovan. “Many businesses have complex issues to consider and big decisions to make. They need to make sure that they are getting proper advice and are aware of all the options available to them.”


Need expert advice on structuring and succession planning? Contact Maurice at maurice@paulodonovan.ie.

Considering change in the new year? Our award-winning advisory service provides objective and specialist advice on funding for growth, succession, exits, mergers and acquisitions. Whatever stage in business you are at, we can resolve your issues and improve your growth opportunities.

Our accountants can advise you on the best way to move forward with your business, whatever your 2022 goals are. Call us at 021 4321799 or email info@paulodonovan.ie.

Your business and legal structure influences everything from taxes to operations to your personal asset risk. It's not too late to make changes. Reviewing your structure now will ensure you are operating under the most beneficial structure in the new year.
Planning growth or restructuring? Check you can take advantage of all the opportunities & funding options available. Thinking of selling or succession down the track? Your planning and structuring now will decide if you pay Capital Gains Tax at 33% or at 10% - or maybe not at all.
Do you have enough protection and cover? Have a financial health check: Review key person insurance cover, life assurance cover, critical illness cover, income protection and provision for pension. Check pension contributions - are they at a level that will fund your desired retirement lifestyle?

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