What Happens to My Business if I Lose Capacity?

What Happens to My Business if I Lose Capacity?

As the owner of a small or medium-sized business, you already know how important it is to protect your company against potential risks. You insure your business assets against damage, fire, and theft; you take out a public liability policy to cover you should a customer be looking to claim damages. You might even have on-site security to protect your staff and stock.

But what about your own ability to run the company? While it’s not something any of us likes to think about, a serious accident or debilitating illness that prevents you from performing your duties as a business owner are always possible. What would happen to your company should the worst happen?

Of course, some businesses have a clearly defined leadership structure that determines the action to take in these sorts of situations. However, these are normally reserved for larger corporations that have an entire board of directors ready to step in and manage the company during your recuperation.

If you are the sole owner or director of your company, you need another safety net to prevent all your hard work from falling apart should you no longer have the capacity to run the business. A lasting power of attorney might be the answer.

What is a lasting power of attorney?

By giving someone lasting power of attorney in the event of your loss of capacity, you are naming them as the person to run your company in your absence. While they will not own the company, they will have full legal authority to make financial and business decisions on your behalf. You can even give them specific instructions on what to do should you be incapacitated on a permanent or long-term basis, such as selling the company.

Who can have lasting power of attorney?

In theory, lasting power of attorney can be given to anybody. In practical terms, it should be someone you trust to have the best interests of the company in mind. This could be a member of the family (particularly if it’s a family-run firm and they are already involved in the day-to-day running of the company). Alternatively, it could be a trusted employee in a senior position with the company, who knows the ins and outs of how the business works.

What happens if I don’t have a lasting power of attorney?

If you are the sole director of your company and do not have a lasting power of attorney in place, nobody else in the company will have the legal authority to handle your business decisions. This can cover anything from taking on new clients, to paying your taxes, to paying your employees for their work. If you are the only signatory for your business account, nobody else can authorise the payments crucial to the ongoing stability of your company.

If you want to protect your business by assigning lasting power of attorney to someone, get in touch with Paradigm Will and Legal Services today on 0800 999 7750. A member of our team will be happy to arrange a free initial consultation with one of our experienced legal experts.

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