I think it was fairly well received. Certainly, the comments that I received were favorable. The majority of the audience said nothing so I will assume that they were just so blown away that they were speechless. Either that or they just did not understand it. I prefer to think it was the former.

Anyway, what I had been speaking about was how to extract cash from a company without giving too much to Boris. Now, as you know, no-one likes giving money to Boris, but everyone likes to get money from him, and we feel aggrieved when everyone else seems to be getting financial assistance from Boris but not us. So, we don’t pay him and he is supposed to pay us. You may wonder, how does he fill his very deep pockets. Well you see, he has a very understanding bank manager, who lets him borrow as much as he likes. Wouldn’t you like to have that bank manager.

Anyway, my main point is that there are various tax consequences to the different ways that you can extract cash from your company. You can take a salary and pay tax and National Insurance, you can pay yourself a dividend and pay the new dividend rate of income tax, you could pay yourself a rent, if you own the business premises personally. These all involve paying too much to Boris.

Another way is for your company to pay contributions to your pension scheme. This is fine. The company gets the tax relief and you don’t pay any tax just now, but you don’t get your hands on the cash. You may not need the cash in which case this is a route to explore.

Now, suppose you also want to start to exit from your company and leave it to the existing other shareholders, possibly the next generation. How are they going to raise the money to pay for your shares. If they must take it out of the company, they will pay Boris oodles in tax just for the privilege.

Does your company have spare cash or can it borrow the money. If so, why not get the company to buy your shares. It may sound a bit peculiar but it is all perfectly legal and not in any way dodgy.

The shares are then cancelled leaving the other shareholders owning the whole or virtually the whole of the company. On top of that, you may only have to pay tax at 10% on the money you receive, and the transaction costs are very reasonable. Worth thinking about. Anyway, that’s what I spoke about at short presentation this week.

I also attended a presentation from someone who originates from the same part of the world as me. No, that is not from under the same stone. He’s not an accountant.

He was using the acronym WAWG. He did pronounce it but I am not sure I would try. It’s an approach I am familiar with. Have you come across a BHAG – that’s a Big Hairy Audacious Goal. Basically, it is that dream or aspiration that I think everyone has at the back of their heads but never speaks about it for fear of being laughed at. Families are especially good at that… especially wives.

But this thing is always there and in many subtle ways will affect your actions on a daily basis. So, you first write down you BHAG, which is the target you are going to aim at. Then you fast forward 10 years and identify what your life and business look like on your way to your BHAG. Then you work backwards, first to 5 years, then 3, then 1 and then 3 months and lastly today. At each of these stages you identify what life and business looks like and what strategies you need to implement to get there. Easy really! I have a one-page plan for doing all this. Give me a call if you are interested.

Anyway, the presenter covered similar ground and had his own one page planner.  So, I was very familiar with approach.

So, what is WAWG? It’s very simple and its is something that most people don’t know. WAWG is an acronym for “Where are we going”. If we don’t know where we are going, all roads lead there. Personally, when I get in my car, I put my destination into the sat nav. My destination in life is loaded into my neck top computer.

Do you have a destination? If not, why not?

Alan E Long

The Long Partnership

07770 738770