Back in August, we wrote about the importance of a Business LPA (Legal Power of Attorney). Little did we know then that the second wave of this pandemic would result in more business owners getting ill, or the lingering effects of Long COVID months after initial infection.
Neither did we know the good news about the development of various COVID-19 vaccines that could consign fear of the virus to the pages of history by summer 2021.
Why consider a Business LPA
If you don’t have a Business LPA in place, you are still at risk of becoming incapacitated through any numbers of medical reasons or circumstances, of which COVID-19 is only one. It’s still important that there should be someone that you know and trust to take over the day to day finances of running your business quickly, and an authority from you giving them access to bank account. They need an LPA in place in order to be able to pay bills, sign papers, and apply from grants and furlough monies too.
What is a Business LPA?
When you create a Business Lasting Power of Attorney (LPA), you appoint a person or people to take over the admin side of your business if you become incapacitated. A business LPA only becomes active when you need it. Your control or running of your business remains with you, until you need the LPA to be activated and someone else to take over temporarily. Once you are capable of taking back responsibility, the LPA becomes “dormant” again.
What happens if I don’t have a Business LPA?
If you suddenly become incapacitated, it can have a devastating effect on your business. Your bank accounts may be frozen if you are the only signatory, you won’t be able to sign contracts or possibly apply for grants and other incentives. In order to function again, your company colleagues may need to apply to the Court of Protection to appoint a deputy, who may not be anyone you know or who knows anything about your business.
When you create a Business LPA, you can appoint someone you know to act on your behalf as your attorney, and deal with a whole range of business matters from wages and invoices to tax and business assets. Indeed, you should actually appoint more than one, just in case one attorney falls ill themselves. So make sure you choose your attorneys carefully and are realistic about their business acumen and abilities. Whilst your instincts may favour appointing family as attorneys, this may not be the best choice for your business. You can appoint your accountant, if they are prepared to take on the role.
As the MCA Code of Practice says:
"An attorney should be trustworthy, competent and reliable. They should have the skills and ability needed to carry out the necessary tasks."
Why get professional help setting up your Business LPA
LPAs are extremely powerful documents, so it pays to invest some time and money in drawing it up properly with the help of a professional. For example, your attorney may need to have particular qualifications or skills to run your business properly. You will also need to check that your company articles of association allow for an LPA.
The good news is that all Business LPAs are temporary and are only activated if required. So, if you need to activate it and then subsequently deactivate it, you have not ‘lost’ your business permanently.
Business LPAs for all directors
A business LPA works for the individual, not for the company. So if you are a co-owner, or have fellow Directors, you should encourage them to make an LPA too. Otherwise they could get ill and you could be landed with all those issues over bank accounts, VAT returns, etc.
Business LPAs and vaccinations
A COVID-19 vaccination is designed to protect you when you need it, and to be inactive when you don’t. The immune response produced by your body’s exposure to the vaccine only kicks in when needed. The rest of the time it just sits there, dormant. A Business LPA is much the same; inactive until you need it, looking after you when it’s active, then deactivating when the threat has passed.
Expert help with Business LPAs
Contact us at Panthera Estate Planning to create an effective and compliant Business LPA. We have rolled up our sleeves and helped set up Business LPAs for all types and sizes of companies, from SMEs to major corporations. Call us, and start protecting yourself and your business.