The position almost every owner is in
The company is profitable. There is money in it. And when you look at what you personally own outside the business, there is very little. All the risk sits in one place, and if the business has a bad few years, so does your retirement.
The job is to move money steadily out of the company and into your own name, in the most efficient way the rules allow, without starving the business. That is most of what we do for owners.
Paying yourself another €50,000 in salary means income tax, USC and PRSI, and you keep roughly half. A company pension contribution of the same amount is generally an allowable business expense, is not treated as benefit in kind, and the whole of it goes into a fund in your name. The difference over a few years is enormous, which is why this is usually the first conversation we have.
Six things worth sorting
Most owners arrive with one of these on their mind and leave having dealt with three.
Company pension funding
Contributions made by the company to a director’s pension are generally an allowable business expense and are not treated as a benefit in kind. For most owners it is the most efficient route from company profit to personal wealth.
Pensions →Auto-enrolment duties
My Future Fund is live and your eligible staff are enrolled automatically. Work out what it costs now and as contributions step up, and whether a company scheme would suit you better.
Auto-enrolment →Keyperson cover
If the person who holds the client relationships is out for a year, what happens to turnover? Keyperson cover puts money into the company at the point it is needed.
Keyperson cover →Co-director protection
If your business partner died tomorrow, you could find yourself in business with their family. An agreement, and the cover to fund it, prevents that.
Co-director cover →Executive income protection
Cover paid for by the company rather than out of taxed income, replacing your salary if illness or injury stops you working. Often cheaper than owners expect.
Protection →Stepping back or selling
Most owners get one exit and no practice run. The timing, the reliefs that may apply, and what the business needs to be worth for the plan to hold.
Succession →If you could not work for a year, what would happen to the business?
Not to your income. To the business. Most owners have never separated the two questions, and they have very different answers and very different solutions.
Your income stops
There is no employer sick pay and no HR department. Executive income protection can be paid for by the company rather than out of taxed income, and it replaces a large share of your salary for as long as you are out.
The business wobbles
If you are the one who wins the work or holds the relationships, turnover falls while the costs carry on. Keyperson cover pays money into the company itself so it can hire, cover, or simply survive the gap.
Bring your accountant if you like.
We will look at what the company is making, what you are taking out, and the gap between the two.
Book a first meetingQuestions we get asked
How much can my company put into my pension?
Company contributions are treated differently from personal ones and are not subject to the same age-related percentage limits that apply to your own contributions. The amounts can be substantial, and are related to your salary, your service and the benefits already built up. It needs to be calculated properly for your situation, which we do alongside your accountant.
Will my accountant mind?
In our experience, not at all. Accountants are generally glad when someone else takes the pensions and protection side, because it is specialist work, it moves fast, and it sits outside what most practices do. We work with your accountant, share what we are proposing, and let them confirm the company side.
Does auto-enrolment cover me as a director?
Very likely not in any meaningful way. My Future Fund is aimed at employees who have no workplace scheme. If you own the business, you almost certainly want an executive pension arrangement instead, which does far more and gives you control over the scheme.
I might sell in five years. Is it too late to plan?
Five years is genuinely useful time. Retirement relief and other reliefs on a business disposal have conditions attached to age, ownership periods and how the business is structured, and several of them need to be in place well in advance. Five years out is a good time to sit down. Five months out is not.
What if the business has a bad year?
That is precisely the argument for moving money out steadily during the good years rather than leaving it all in the company and hoping. Pension contributions can generally be varied year to year, so the plan can flex with the business.
Pick a date and time that suits you.
No sales pitch, just a conversation about what you already have, what it is heading for and whether we can improve it. You will get a written summary either way.
