What is a Business Lasting Power of Attorney (BLPA) and why are we raising awareness of it?
What is a Business Lasting Power of Attorney (BLPA) and why are we raising awareness of it?
A Business Lasting Power of Attorney is a legal document that allows a business owner to appoint someone they trust (an Attorney) to make business decisions for them if they are unable to act themselves (for example because of illness or a car accident).
Appointing a business Attorney, which I will refer to as a ‘Business Guardian’, means that even if something unforeseeable happens to the owner of the business, the company can still legally function until the owner/director gets better.
I don’t have an LPA for my business. Why is this risky?
If you are unable to make business decisions due to illness or accident, unless you have appointed a ‘Business Guardian’ to deal with your business during your absence, the cost and disruption to your business could be enormous. For example:
- The business’ bank account could be frozen leaving your employees, suppliers and other outgoings unpaid.
- An overdraft could be recalled and the ability to enter into future contracts could be lost.
- The existing contract could be void or voidable making the company open to legal challenge.
- Confidence in your business could be lost very quickly affecting future business relationships.
- Important: if you are one of the directors in a limited company, you should consider appointing a Business Guardian as your fellow directors are no longer allowed to remove you from decision making due to the lack of mental capacity which often brings matters to standstill.
Why not just let the Court deal with things?
- If you have not put in place a BLPA and lose mental capacity, then a “Deputy” would need to be appointed by the Court of Protection.
- This is a very costly process but more importantly it takes on average 6 -12 months to get someone appointed by the Court.
- The business owner would have no input into the selection and appointment of the Deputy and how the Deputy runs the business.
Okay, it sounds like a reasonable thing to have, but what’s in it for me?
There are several advantages to getting your business’s legal basics in order.
- Although, BLPA is mostly used in the event of a business owner losing mental capacity, it can also be used (with the owner’s permission) while they are fit and healthy but want someone else to look after their business for a while (long holidays, succession planning, testing how children cope with running the business etc). BLPA can become a very useful tool and as such it affords flexibility to business owners.
- When a valid BLPA is in place business owners send clear signal to their investors and clients that if anything unforeseeable happens to them, as far as they are concerned, it is business as usual.
- Most importantly BLPAs provide the business owner’s family and employees with peace of mind.
Is an LPA for business tax deductible?
Absolutely, obtaining a business LPA is a valid business expense.
What if I change my mind about the person appointed to be my business Guardian?
BLPAs are very flexible documents. You can specify when and how you would like your ‘Business Guardian’ to act. You can cancel your existing BLPA and/or create a new one at any time providing you have mental capacity.
So, how does it work?
Creating a BLPA with us is easy! It starts with a mini business audit which usually takes one hour. We will take your instructions, advise you accordingly and draft the relevant documentation. We will also provide the necessary certificates and help with execution of the prepared documents. If required, we will also apply for the registration of the LPA on your behalf.
This article is intended to provide a general overview and is not a substitute for professional advice.
Call us on 01244 478 730 for a free no obligation chat.
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Business legal basics – What you need to know before setting up your business
Business legal basics – What you need to know before setting up your business
Starting a business is an exciting journey but it can also become overwhelming. According to Business News Daily’s advice for startup founders, one of the biggest mistakes a company can make is not registering their business. There are many legal aspects to consider, some of which include: Choosing the correct business entity, filing for registration, choosing insurance, data compliance, trade mark searches, principles of equality, health & safety and reporting to HMRC.
Sole trader vs Limited companies vs Partnership
Before you can register your business, it may be a good idea to sit down and think about what business entity would suit your vision. For example, if you are thinking about setting up a small online business, it could be better register as a sole trader. This way you get to keep all your profits after tax but it also means you will be entirely responsible for any losses that the business makes. There are a number of questions to ask yourself and a great place to start is to speak to one of our experienced and qualified solicitors who will be able to guide you through the rest of this exciting process safely and effectively.
Registering your business
You can apply to register your business here once you have all the details of how you wish to run your company.
Insurance
Depending on the nature of your business, you may need to obtain several insurance products. It’s vital for instance to have adequate insurance in place in case something happens to an employee whilst working. Employers’ liability insurance can cover for any claims made against your business and it is a legal requirement to have this in place. Without this insurance, an employer could be faced with a daily fine of £2,500.
Business Lasting Power of Attorney
It is important to ensure that your business can legally function without you (in case of an accident or illness). You can download our free guide on BLPAs here.
Data compliance
Smaller companies are also required to comply with UK data law such as the GDPR. For example, if your business stores customers’ personal data, you must ensure you have sufficient IT security to prevent the data being hacked. You must also show that the information is obtained legally and is dealt with fairly. For further information on how your business needs to comply with the principles of GDPR, please fill in the form on our website and one of our solicitors will get back to you.
Employees’ right to work and other checks
This encompasses a range of issues such as:
- Proper documentation e.g. right to work
- DBS check
- A written statement of terms and conditions
- Employees must be paid the National Minimum Wage
Principles of equality
Under the Equality Act 2010, employers must avoid discrimination and promote equality of opportunity. This means it is unlawful for employers to discriminate against anyone on the basis of certain protected characteristics e.g. gender and ethnicity to name a few. Care must be taken when writing job descriptions, hiring and holding exit interviews to ensure potential and existing employees feel supported throughout the process.
Health and safety
Where a business has five or more employees, it is mandatory to have a written health and safety policy in place. As an employer, you are responsible for the safety and wellbeing of your employees which is why carrying out a risk assessment is important. For further information on how to go about this, check out a helpful guide here.
Reporting to HMRC
A successful business needs a good payroll, this will allow it to keep track of wages paid to employees and other information which can be used to report to HMRC. Certain changes to your business need to be reported, such as hiring a new employee or any PAYE deducted.
Without accurate information, a business can be given a penalty which can affect its reputation in the market.
At MLS, we work with clients to ensure that all legal aspects of their business are covered and that they are fully supported through their time with us. Our consultant solicitors have years of experience working in various sectors, which means they have specialist knowledge to provide all round service.
This article is for informational purposes only and does not constitute legal advice. To book your free initial consultation, please call on 01244 478730.
Legal Documents Every Business Start-Up Needs To Consider
Do you know which documents your new business needs?
As a new business owner there will no doubt be some uncertainty with regards to which legal documents you may require. Depending on whether you are a sole trader, partnership or company and what product/service you are providing, some documents will be needed more than others. I have outlined below the basic documents that you should think about when starting up.
Do you have co-founders?
If yes, the document you should really be considering depends on the structure of the business. Where a partnership has been formed the document would be a partnership agreement and for a company a shareholder’s agreement.
These are private agreements which detail, for example, how decisions are to be made and how the business should be valued if sold or one of the owners wants to leave. If you have formed a company there is a requirement for articles of association, which is a public document that details how the company must be run and administered.
As well as owning the company you will work for it (unless you are a non-executive director), so a director’s service agreement (employment contract) will be needed. This document will contain additional clauses to an employment contract that are relevant to someone who runs a company. If you bring in an employee then they must be provided with an employment contract.
Confidentiality agreements
You have come up with an amazing business idea and understandably you want to share it with anyone who is willing to listen but take some advice from Gwen Stefani and “don’t speak.” That is, not until you have spoken to a lawyer about putting in place a confidentiality agreement with the right clauses.
You do not want to share too many of your new business details with a company that has the resources to execute your idea before you have had the chance.
Contracts with your suppliers and customers
Irrespective of whether your business is being supplied to or is selling a product/service, a legal document should be used to record details of the transaction so that all parties understand their rights and obligations.
Does your business have a website?
If your business collects or processes personal information there is a legal requirement to have a privacy policy page on your website and if you are going to be selling through your website there should also be a page specifying the terms and conditions.
New businesses do tend to overlook the protection of intellectual property (IP), as they think it only applies to designs. IP does, however, also cover your website content.
Every business has different needs and I have only covered the basics. The purpose however, of having written legal agreements is to clearly state what has been agreed and to create rights for the respective parties, which are enforceable in law.
This article is for information purposes only and legal advice should be taken for individual circumstances.
My Local Solicitors Ltd are experts in getting business start-ups off on the right foot. Our business start-up solicitors proved flexible, cost-effective legal advice to help you identify your legal requirements and grow your business the safe and legal way.
Get in touch on 01244 478 730 to discuss our essential legal documents package.
ESSENTIAL LEGAL DOCUMENTS PACKAGE, INCLUDING:
- A consultation with a solicitor.
- Terms & conditions of business.
- Confidentiality agreement.
- Consultancy agreement/employment contract.
- One round of amendments.
- Final documents.
What is a partnership agreement and do I need it?
When starting a business, partners may feel excited and optimistic regarding the future of the company and may believe that they will always get along with one another. This is not always true.
There are a number of factors which can affect the day to day running of a business, such as change in legislation or personal vision for the company. These issues are likely to create a difference in opinion in minor matters or major transactions and lead to stressful situations. Therefore, it is wise to consider the possibility of obtaining a partnership agreement which protects everyone’s interest along the way.
What is a partnership agreement?
A partnership agreement is a formal contract that outlines each partners’ responsibility and aims to divide these equally between all parties. Depending on what type of company you have, a partnership agreement may take on a slightly different name. There are three types of agreements, including:
- Operating Agreement for limited companies;
- Shareholder Agreement for corporations;
- Partnership Agreement for general partnerships
Why create a partnership agreement?
There are major benefits to having a partnership agreement, some of these are discussed below:
Clarity
This form of agreement helps to establish rules for each partner and dictates how a partnership is run. A major benefit to having such an agreement in place is that it removes any doubt as to the partners’ position and role within a company, thus, leading to fewer disagreements.
Reduces costs
If a partnership agreement does not cover a particular situation, there may be disagreements concerning its operation which could result in solicitors being involved. If the dispute is not resolved, it will cost the business time and money to reach a fair decision, especially if courts are involved. Planning in advance and setting out clear terms will help to remove the stress and reduce the chances of a dispute getting out of control.
The Partnership Act 1890
This piece of legislation will be used to govern a partnership in cases where there is no partnership agreement. This will put the company and its partners at a major disadvantage, as the law is quite archaic and will presume all partners have an equal stake in the business. This will not factor in a non-performing or disruptive partner and will contribute to further disputes moving forward.
Financial contribution
If you do not have a partnership agreement, the law as mentioned previously, will assume all partners have an equal share. Therefore, this will not take into account how much each partner has contributed to the company in terms of capital and is likely to result in an unfair financial settlement for those who may not have invested as much or carried out the same level of responsibility.
As seen in the examples above, the main purpose of a partnership agreement is to ensure that all partners have a clear vision of their roles and responsibilities. It acts as a safeguard to protect their financial interests as well as dictate how partners can be removed. The main goal here is to ensure fair practices and reduce costs to the company due to disagreements and/or failure to perform.
This article is for information purposes only and does not constitute legal advice. Please get in touch with us by calling 01244 478730 or email hello@my-local-solicitor.com and one of our experts will be able to advise.
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Why an LPA for business is an invaluable asset
An LPA (Lasting Power of Attorney) is a document used to legally authorise a nominated person (your attorney) to make specific decisions for you.
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