Our experiences and knowledge have enabled us to develop detailed project systems.  These allow us to carry out special projects in such a way that you can follow the steps and procedures.  Our clients understand exactly what is going on and what the issues or deadlines are.  The processes allow us to specify fees accurately; we only charge the quoted amount for any work.  The fee quotations for any of these projects will depend on circumstances but will always be fair and reasonable remuneration for the work involved.

Incorporation of a business
Transferring a trade from self employed status (sole trader or partnership) to a limited company can have many pitfalls.  Detailed consideration of the consequences and options available must always be made.  Tax and financial planning are vital as it is difficult to transfer back (disincorporate).  The value of the business including goodwill must be established.  The business will be sold by the individual owner(s) to the company and this is a taxable transaction based on market value.  The tax on the sale can work out to be very favourable, significantly reducing your total tax bill in the long run.  Formalities regarding HMRC, banks, employees, customers, and suppliers must all be dealt with correctly and in a certain format. 

Enterprise Management Incentive (EMI) share option schemes
EMI share schemes are excellent for attracting, motivating, and retaining key members of staff and are suitable for many small businesses.  They are tax efficient and straightforward to administer.  Within the scheme share options are issued to staff on a completely discretionary basis.  The employees then have the option to purchase shares in the company at a fixed price (usually the current value) at some point in the future (usually thee to ten years from the date of the option).  As your company grows the value of the shares increases, hence the options become valuable.  Restrictions in the shares and option contracts mean that you always retain control of the company, the options or shares cannot be transferred and the employee will forfeit the options if they leave.

Enterprise Investment Scheme (EIS)
This schemes offers tax reliefs to individuals investing in trading companies other than companies they are connected to.  A minimum investment of £500 is required.  The investor’s tax liability for the year is reduced by 20% of the amount invested and gains can be free of capital gains tax.  The shares must be held for at least three years.

Company restructuring
Creating a group structure can bring benefits to a growing business.  A company that has accumulated significant assets and has grown its trade may wish to separate the valuable assets from the risk of the trade.  Owners who are looking to take a more controlling role in a business may also wish to have the value separated from the trade. 

Within a group structure assets and trade can be separated, thereby protecting the assets.  Family members or employees can become more involved in the trade side of the business without the need for them to purchase a share of the asset value.  The creation of a trading subsidiary may help you meet your objectives.

Business, company and share valuations
The valuation of a small privately owned business is very subjective.  Ultimately the value may depend on the specific negotiations between a willing buyer and willing seller.  Often there is a need to estimate the value of a business in the absence of such a deal.  Valuation of a company and its shares will start from the value of the underlying business.

It can be useful when estimating a business value to consider how much it would cost a potential purchaser to set up a similar business from scratch.  If all costs are accounted for, including a value for the buyer’s time, then the cost of setting up the same business will indicate a likely maximum for the business value.  Profitability is key to estimating a value.  Large companies are often valued at eight to twelve (or even more) times their profits, this is the “price earnings ratio”.  Small businesses are more risky and easier to replicate, meaning that values of three or four times profits are more likely.  When calculating such profits it is important to estimate the potential buyer's profits which may be different from the existing business. 

Valuations should avoid double counting, ie including both future profits and business assets.  A business might be valued on its assets (break up valuation) or its profits (going concern valuation) but not both.  Having said that, surplus assets or liabilities to the bank or directors that should be split off from the trade are added to or deducted from a profits based valuation.

Other projects
We have significant experience of carrying out all of the above projects and many others including partnership changes, cessations, winding up of companies including capital distributions, sales and purchases of businesses and company purchase of own shares.

Please contact us to discuss any projects.  We will be happy to work with you whether you are an existing client, intending to take up our services or simply require one off advice.