Business Profile
By Leon Arnold of Thomas Eggar LLP
There’s no exaggeration in saying 2009 was a challenging year for businesses and individuals. As with much of the UK, many directors working in the Thames Valley faced some unenviable decisions that resulted in job losses across the region, including their own!
At Thomas Eggar LLP we believe in these chastened times individuals and companies must consider ways they can use legislation and protection provided by the law, to their best effect. Directors may not be able to directly influence the markets they are working in but they can use the tools at their disposal to better protect their operations and help build a competitive advantage.
The current economic climate presents directors with a raft of uncomfortable decisions whilst producing commercial opportunities that are unlikely to be found in times of relative prosperity. One of the directors’ key tasks in 2010 will be to recognise when to seize opportunities, but also when to take a step back and consolidate, protecting the interests of the company.
We suggest below some simple considerations by directors which can go a long way towards creating a more commercially robust 2010 both for them and their businesses:
n Directors’ duties. Economic climate change does not affect a director’s duties and potential liabilities, during this downturn you should reflect and take steps to prevent any breaches of duty and the possible imposition of sanctions on you personally. Any sanctions incurred will inevitably divert much needed energy away from the vital business of running and developing the company.
n Intellectual property. In 2009, some company assets may have fallen in value, intellectual property (IP) rights however may have risen. Competitors will be less willing to allocate budget to research and development projects and there are infringers in the market place eager to profit off the back of your company's brand, invention or creation. Control is key in maintaining a strong brand so be quick to react to those who might be infringing your IP rights.
n Keeping key members of staff. Some businesses may find it difficult to provide bonuses or pay rises to key staff at the moment and might worry they could look elsewhere. One option is to offer a share incentive – an opportunity to acquire a stake in the business and to profit on future sales. It can also be a cost effective way of giving some tangible benefits back to your employees and rewarding their loyalty and performance. In addition, auditing your employee benefits can be an effective way of saving money by reducing premiums and administration costs.
n Tax changes. April 6 sees the introduction of the 50 per cent income tax rate for anyone with income of over £150,000 per annum and the tapered withdrawal of personal allowances from those with incomes of over £100,000 per annum. To minimise the effect of these changes, directors should look at either accelerating payments so that income is received before April 6 or deferring them until tax rates have (hopefully) reduced.
The Director e-bulletin
As part of its service to directors and shareholders, the Thomas Eggar Director and Shareholder team publishes a monthly e-bulletin – The Director. It highlights the issues relevant, particularly in economic circumstances which present additional challenges to the successful business.
If you would like to receive The Director, please e-mail: anna.dunn@thomaseggar.com
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