Webinar recording: Be a tax efficient business from inception to exit

Gravita Corporate Tax Partner, Toby Hermitage, presented a 45- minute webinar focusing on the key phases of a typical fast growth business and take you through a number of ways to optimise for tax to maximise your chances of success, including how to raise tax efficient investment and not blow it on staff costs!

Phase 1

You’ve had a great idea, or you’re working on the next one.

Once you’ve built the business, what is your exit strategy? Believe us, you need to consider this now.

Phase 2

Raising finance to launch the business:

Typically, but not always, this would come through SEIS (Seed Enterprise Investment Scheme) – which is often through friends and family – where the reality is banks will seldom lend at this part of the process.

SEIS needs to be managed carefully and with specialist advice to make sure you benefit from all the advantages – and ensuring the best value out of your loved ones’ cash.

High quality professional advisers on the sideline will minimise risk which will be key to managing those personal relationships and give you crucial hands on advice at this critical phase for the business.

Phase 3

You have to consider exit at this stage (if not already), and such planning is key:

EMI (Enterprise Management Incentives) – Growth, recruitment and team retention as you head into phase 4. At this point you are generating income and need to continue to expand the team whilst managing cashflow, tax efficiently.  For qualifying businesses, EMI will save you cash, employer’s NI and salary costs.

Key areas of consideration for EMI: Which key staff to approach, do they understand why this is good for them and ensuring successful implementation.

Debt finance – Making sure you are working with the right lenders and understand the impact of covenants, personal guarantees and the inevitable issue of base rates.

R&D – For tech and many other sectors – this has to be considered as a key way to preserve cash flow.

Phase 4

Expansion and further fundraising:

At this point, this will come from external sources which could still be through EIS, crowd funding or private equity and we will talk you through the benefits and pitfalls of these and all such options.

As EMI thresholds become more limiting, growth shares may be a feasible option for recruiting and retaining your next layer of staff and retention of the value of the business.

Phase 5

Phases 1 – 4 have been leading up to this point, this is the time at which the business will need to be able to reassure potential buyers and investors, and their due diligence requirements, as you plan for exit or IPO.

Watch the video below, to gain more insight into the Seed Enterprise Investment Scheme (SEIS), growth shares, Enterprise Management Incentives (EMI) and more.