Investing in business, this is a very common asset class over the last couple of years. You could be a sole trader, a contractor or even starting your own business. What is important is that you look at your business as part of your overall wealth plan. A big trap that business owners fall into is that they keep a lot of the wealth tied up in their business.
This over exposes them to a single asset class, just like you wouldn’t put all of your money in one share, you shouldn’t have all of your money sitting in your business.
Some of the key considerations to think about are:
- Your structure – how is it owned?
- The tax – how do you minimise the tax that you pay and how do you extract the wealth form your business in the most tax effective manner.
- And your exit strategy – You need to have an idea on how you are going to get out of the business so when you setup the structure initially you can set it up with the exit strategy in mind.