WEALTH PLANNING FOR ENTREPRENEURS

1. Holistic and strategic

Plan

When clients are starting a new venture, their priorities usually start with “business” and “family”. “Personal finance” often features further down their list, and we advise them to think more broadly about their wealth situation. We recommend that clients consider account diversification, business governance, taxation, relocation and succession, to create a full view that addresses the financial goals they have for themselves, their family and their business. By making conscious decisions in this way, they can take appropriate steps to ensure that their wishes in providing for themselves and their family are properly reflected in the outcomes.

2.

Trusted network of partners and advisors

Business owners are often more successful in making decisions if they have analysed all the facts, options and circumstances together with experts.

It’s crucial to build a network of trusted advisors you can call upon when needed; so, in addition to a wealth management specialist and a tax advisor, think about lawyers, accountants and an independent advisor in your field of business. Employing an independent director can be beneficial in helping owners to focus on the business more objectively.

Remember: launching a business is a complex process so no one advisor has all the answers. Our expertise is in taking a high-level view, but the key is to select, harmonise and manage a professional service team that can incorporate, analyse and coordinate the different moving parts.

3. Legal structures, place of incorporation and management

It’s essential to evaluate the needs and opportunities of your business properly, as the decisions you make when setting up your company will steer its financial developments in the years that follow. Depending on your business activities, it may not be easy to change your company’s domicile at a later stage, so it’s essential to choose the right jurisdiction when setting up. Your choice of legal operating structure will depend on factors such as your business goals and objectives, financial capacity, the share class, the circle of shareholders, double taxation treaties and the way you plan to run your company. As for the place of incorporation and management, you need to consider factors such as the business activity, substance requirements, corporate income tax rates, and whether to rent or buy the business premises.

4. Diversify your wealth and segregate business activities from personal wealth

It’s typical for entrepreneurs to tie up much of their own wealth in their business. When you’re so focused on managing your new company’s ongoing operations, you can forget the importance of diversifying your asset portfolio.

Ensuring you segregate business activities from personal wealth is important, and a clear legal separation is key to preserve your wealth. There are different ways to achieve this, for example, by holding the shares in your business in a different structure than your portfolio of liquid assets.

5.

Regular circumstance review

As an entrepreneur, your world is constantly turning due to continuous changes in the legal, regulatory and tax environments – not to mention changes in your personal life. Regular reviewing is key; as your business grows, try to keep at least 6-12 months of your expenses in liquid reserves at all times and ensure that you have proper risk coverage and protections in the event of ill health or disability.

If you have dreams of starting a business, Julius Baer’s Guernsey team is experienced in guiding sophisticated private clients and entrepreneurs through the wealth planning elements of managing the latest venture. Contact Jean-Luc Le Tocq, jeanluc.letocq@juliusbaer.com, to find out more.

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