EF News
By Tom Solly, Director of Wealth Management at RBC Brewin Dolphin
It can be easy to neglect your own finances when you’re focused on growing your business. But creating a solid plan for both your business and personal finances can give you more confidence that your hard work will pay off.
Here, Tom Solly of RBC Brewin Dolphin shares his four financial planning tips that every entrepreneur should know.
Make the most of pensions
Many entrepreneurs view their business as their retirement fund, but this mentality carries risks. If your business doesn’t sell or falls short of expectations, your retirement could be jeopardised.
Making contributions to a pension offers a tax-efficient way to build a safety net.
Business owners can make both personal and employer contributions, which carry tax benefits.
Your accountant can help you make the most any personal and business tax reliefs available to you, as well as advise on the most appropriate business structure for tax purposes.
Protect against risks
You’re probably well-versed in insurance for your business premises and stock. But have you thought about insurance for what’s arguably your most valuable asset – your people? As an owner, you are your business, and in the case of illness or death, your operations could suffer. Protection against this could be crucial for entrepreneurs.
You may also want to consider protection for the other key people in your business. Key person protection and shareholder protection are just some of the solutions that could help your business stay afloat should the worst happen to one of your key members of staff or shareholders.
It could also be worth getting legal advice to set up a cross-option agreement. This would give the surviving shareholders an option to buy back the shares of the unwell ordeceased shareholder, helping to minimise business disruption.
Finally, make sure you have an up-to-date will. This will ensure your shares or business interests are passed on to the right people when you die, and that your family are taken care of.
Plan your exit in advance
Exiting your business may seem along way off, but thinking about your exit early on could reap rewards further down the line.
Even if retirement seems distant, define your “magic number” - the amount needed from a business sale to fund your ideal lifestyle. A wealth manager can help you work out how much your future lifestyle might cost, and whether the potential proceeds from a sale, alongside your pensions, savings and investments, are likely to be sufficient. They can also work with you to allow you to undertake new projects or invest in other ventures. If you are hoping to leave your business to your family, you might qualify for Business Relief (BR). Under the current rules, qualifying for BR may mean there’s no inheritance tax (IHT) to pay on the value of your company shares when you pass away. It’s important to note that from April 2026, the current full relief from IHT, per person, will only apply to the first £2.5 million of qualifying assets. A 50% rate of relief (an effective tax rate of 20%) will apply thereafter.
Surround yourself with experts
There’s a lot more to being a successful entrepreneur than just having a good idea. Your business needs to be built on solid financial foundations to grow. That’s why it’s important to surround yourself with a team of experts from day one.
It’s also important to review your financial plans regularly to ensure they still align with your business and personal goals. At RBC Brewin Dolphin, we can introduce you to the right people at the right stage of your journey – whether that’s venture capital firms, lawyers, or accountants.
We’ve worked with thousands of business owners, helping them to gain clarity over their financial future and supporting them in making the right decisions. Let our ideas help you plan for the future with confidence.
To find out more about how we can help you manage your wealth, please email Tom Solly.
The value of investments can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy and does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist.
