As a business owner or director, your business is not just your livelihood, it can also be the engine that builds your personal wealth. But turning business success into personal financial security requires careful planning, smart tax strategies, and a clear understanding of your options.
1. Pay Yourself Tax-Efficiently
The first step in building personal wealth is ensuring you’re extracting profits from the business in the most tax-efficient way. This often means:
- Salary & Dividends Mix: A modest salary keeps you within your personal allowance, while dividends (taxed at a lower rate than salary) help you draw further income.
- Pension Contributions: Making employer pension contributions from the business can reduce your Corporation Tax while building long-term personal wealth.
- Company Benefits: part of your remuneration package can include benefits, such as a company car, gym memberships and more, but be aware that these may incur Employer’s National Insurance & Tax if they are deemed to be benefits in kind
2. Use Your Business to Fund Investments
Once your cashflow is stable, you can use surplus profits to:
- Invest in property through the business or through a special purpose vehicle (SPV) company.
- Build an portfolio of stocks, shares, or other assets.
- Explore tax-efficient investments like SEIS or EIS schemes.
Each option has tax implications, so seek advice on the right structure for your circumstances from an accountant or financial advisor.
3. Plan for Your Exit Strategy
Your business is potentially your largest asset but how will you eventually turn that into personal wealth? An exit plan is essential:
- Selling the business: Plan early to maximise its value and minimise Capital Gains Tax.
- Succession planning: Passing it to family or management can also be structured tax-efficiently.
- Shareholder agreements and protection: Ensure you have clear agreements in place to protect your wealth if circumstances change.
4. Protect What You’ve Built
As your personal wealth grows, so do the risks. Make sure to:
- Have appropriate insurance (e.g. shareholder protection, key person cover).
- Consider trusts or estate planning to safeguard wealth for your family.
- Get advice on Inheritance Tax planning early on, wealth built in a business can be passed on more efficiently if structured correctly.
5. Work with Trusted Advisers
At Brisan, we help directors not just with their business accounts, but with their personal financial goals too. From basic tax planning and profit extraction to exit strategies, opportunities, investments and collaborate with financial advisors, to help you make decisions that benefit both your business and your future wealth.
Contact us to discuss how we can support you through your personal and business goals.
