How can I protect those who invest in my business?

Frequently Asked Questions

If your business is trading as a sole trader/ partnership, it’s important to ensure that your spouse has a separate bank account, and that none of your personal assets (such as your home) have a loan secured over them. Secured loans are ranked towards the top in order of creditors, therefore any investments into the business should take this form. In reverse, investments which take the form as shares will be at most risk if the company fails. However, to add another layer of complexity, investments that are taken as loans can affect the solvency position of the business, as they’ll be deemed as a liability (as opposed to share capital which is recorded as an asset). Obviously, this is a specialist area, therefore advice should be taken at the earliest stage possible.