Posted by: Paul Stanford

 

 

Private investment – making your business more attractive

 

Much has been written lately about the potential benefits of investment from private investors for small businesses. So I’m not going to go into these but I do want to tell you how you can potentially make your business more attractive to a potential private investor from a taxation perspective

 

Clearly you have to have done your homework and present a solid business plan which is backed up by realistic financial forecasts, appropriate research and considered assumptions. You also need to be able to deliver a good pitch to potential investors.  But you can also make your business more attractive by making it a more tax efficient proposition for your investor.

 

So how do you go about this? Well one way is to register it for EIS (Enterprise Investment Scheme). This is a process that you do with HMRC – it costs you nothing but could make a real difference to your investor. Essentially a business that has EIS will mean that an investor will get 20% tax relief on his investment (up to a maximum of £500,000 pa) provided the shares are held for at least three years.  In addition, EIS offers investors capital gains tax deferral and 100% inheritance tax relief. 

 

Hopefully you can see that if an investor is looking to invest in a business then he is likely to invest in the one that has EIS over the one that doesn’t, assuming both businesses are of equal standing in other respects.

 

Paul Stanford is a Director of 4Momentum http://www.4momentum.co.uk. 4Momentum provides business advisory services to small businesses, charities and social enterprises primarily in Sussex. Services include advice on starting a business, growing and transforming a business and selling a business. Clients typically contract 4Momentum for short periods of an hour to long term consultancy over many months for advice on subjects such as mentoring, business planning, sales and marketing advice, bidding for contracts, raising finance and general business advice. Paul is approved by the UK Government to deliver business advice on their behalf through Business Link and is a member of the Institute of Business Consultants. Visit his blog at http://www.paulstanford.co.uk/blog

Copyright 2008 Paul Stanford

 

 

 

You might also enjoy this....

• Raising Finance Small Business (0)
• HBOS And Lloyds Small Business Pledge (1)
• Factoring Companies…They Are All The Same Aren’t They?!??! (0)
• Small Business The Importance Of Cash Flow (0)
• Finance For Small Businesses (0)
• Roadmap to a Customer-Centric Strategy (0)
• Follow These 8 Behaviours to Ensure Success as an Entrepreneur! (0)
• Important Information If Your Business Has An Icelandic Bank Account (0)
• Shoreham Town Association Christmas Event 9th December Video Clip (0)
• Business Mileage VAT Reclaim (2)

No comments