Here at Wallstone Financial Planning we regularly come across risks and opportunities that are being overlooked by prospective clients. We help our clients to identify, address and monitor those opportunities throughout their careers and indeed throughout their retirements. The following is a list of just 5 areas that we often see being over looked by directors of Irish SMEs;
- They are not positioning themselves or their company to avail of Retirement Relief and/or Entrepreneur Relief; Retirement Relief and Entrepreneur Relief are two highly tax efficient mechanisms that are currently available to extract funds from a company however certain criteria must first be satisfied before Revenue will approve wealth extraction from your company in this manner.
- They Underestimate the Effects of Inflation; Inflation at the moment is low but if we assume that inflation over the medium and long term gravitates back to the long-term average of approx. 3.25%, (recall that inflation in Ireland hit 20% in the 1970s/early 1980s), €100,000 today will have the purchasing power of €72,627 in 10 years’ time and just €52,747 in 20 years’ time. If you have an investment time frame of 5 years+, one of the biggest risks that you might be taking today is taking no risk at all. Your savings/investments need to keep pace with inflation at a minimum.
- Either they and/or their spouse, are not taking a taxable income from the company; A key determining factor when calculating the maximum tax efficient lump sum that can be extracted from a company is the number of “years of service” that one has with that company. The repayment of a director’s loan as opposed to drawing of a taxable wage does not qualify as “years of service”.
- They haven’t planned for health problems; Heart attack, stroke and cancer account for over 80% of Specified Illness claims in Ireland. A non-smoker male aged 35 has a 17% chance of being diagnosed with a serious illness between now and 68. A 45-year-old male who smokes has a 36% chance of being diagnosed with a serious illness before their State Pension age. Tax efficient protection plans should be considered to protect you, your family and your business in the event that you are unable to work for a prolonged period of time.
- They don’t know “their number”; Unless your job is also your hobby, none of us want to work for longer than we have to. Life is not a rehearsal and if, using conservative assumptions, you can determine that you will not outlive your money consideration should be given to exiting your business in the most tax efficient manner possible.
For a confidential 1-hour consultation completely at our expense please contact us today at firstname.lastname@example.org or on 061-440044.