AXA Business Protection

This presentation is directed at professional financial advisers only and should not be distributed to or relied upon by retail customers.

AXA Protection Account Business Protection

This presentation is written for you as a professional financial adviser. Please do not show this to your customers.

AXA Business ProtectionTypes of Businesses and their Needs



AXA Business ProtectionTopics to cover…

Sole TraderPartnership Limited CompanyQuoted Limited Company



AXA Business ProtectionTax

We offer some information about tax within this presentation. This information is based on our understanding of current UK Tax legislation. Tax rules are subject to change and their value depends on the customers circumstances.



AXA Business ProtectionSole Traders

Occupied in pursuit of profit through trade, profession or vocation

Turnover (financial measure of gross outputs) can relate to goods supplied, time charged and/or work completed.

Expenses are those costs incurred in achieving turnover The difference is net profit (or loss)



AXA Business ProtectionSole Traders

Net profit is taxable each tax year Losses are carried forward or set against other income (or

carried back in certain circumstances) In calculating taxable profit or loss, adjustments are made

to accounts profit in accordance with Revenue legislation Taxable Profits are charged to Income Tax ( there are

separate rules covering Capital gains) Capital involved in business represented by information in

balance sheet.



AXA Business ProtectionSole Traders Protection Needs…

Personal Life/Critical Illness Income Protection (Health) Loan Protection Key person for employee's? IHT mitigation, Pension etc



AXA Business ProtectionPartnerships

More than one person sharing a business venture Governed by an agreement between them Joint and several Only able to contract as individual(s) “on behalf of

business” Principles of Sole Trader accounting followed but with

Profit /Capital split in accordance with partnership agreement



AXA Business ProtectionPartnerships

Each partner responsible for submission of their profit share to HMRC but often dealt with by Partnership Secretary

Same calculations as for sole trader but with added requirement to account fully for capital shares

Each partner will have capital in business



AXA Business ProtectionPartnership Protection Needs…

Each partner needs personal life and critical illness cover Each partner needs income protection Each partner needs loan protection

The business needs: Key man protection Loan protection for business loans Capital protection based on each partners share of value

in the business



AXA Business ProtectionLimited Liability Partnerships

Growing trend Same as standard partnership with :

Joint and several liability restricted to their subscribed capital

Partnership is legal entity so can contract in the name of the partnership

Partnership registered with Companies House and returns need to be made

Some measure of creditor protection stipulated



AXA Business ProtectionLimited Liability Partnership Protection Needs…

The partners of the company would want to :

Protect their share of the business by ensuring that profit is not impacted by the death or critical illness of key employees

Assurance that in the event of a partner suffering death or critical illness funds are available for the surviving partners to purchase the deceased’s share from their estate

Any borrowings are protected if their repayment is dependent on key employee performance



AXA Business ProtectionSmall Limited Companies

Bound by Memorandum and Articles of Association Registered at Companies House Returns have to be made to Companies House Employees are salaried Shareholders own the business and potentially receive

dividends Company has a legal identity and can contract



AXA Business ProtectionSmall Limited Companies Protection Needs…

The shareholders of the company would want to :

Protect shareholder value by ensuring that profit is not impacted by the death or critical illness of key employees

Assurance that in the event of a shareholder suffering death or critical illness funds are available for the surviving shareholders to purchase the deceased’s shareholding from the estate

Any borrowings are protected if their repayment is dependent on key employee performance



AXA Business ProtectionQuoted Limited Companies

Larger businesses Broader shareholder base Audits required Deeper return obligations ( Companies House and Stock

Exchange) Employees are salaried Shareholders own the business and potentially receive

dividends



AXA Business ProtectionQuoted Limited Companies Protection Needs…

Protection in the event of a member of senior management suffering death or critical illness

Protecting profit in the event of the death or critical illness of key employees

Protection against any adverse consequence of the death of a major shareholder



AXA Business ProtectionBusinesses Keeping Financial Records

All businesses have to file tax returns with HMRC and some have to lodge financial information with Companies House Standard format :

Profit and Loss Account Balance Sheet ( sometimes not required for a sole trader) Management Accounts Business Plans Project Plans These are varied dependent upon the type of business



AXA Business ProtectionAccounting & Tax

For income:

Profit and Loss Account Records revenue matters ie. Gross Income less cost of sales = Gross Profit Reduced by expenses incurred in running the business= Net profit

HMRC have their own rules regarding expenses so the accounts lodged with HMRC will have an adjusted profit calculation.HMRC rule is that only expenses wholly and exclusively incurred ( in the achievement of profit) is allowable.



AXA Business ProtectionAccounting & Tax

For Capital:

Balance Sheet This shows the position at a point in time of how the business is funded It indicates where money has come from and how it has been used . It reveals a value of assets ( but not necessarily market value)

It is a snap-shot and as such is often positioned in best light!

Documents

AXA Business Protection