Business LPAs

Most people have heard of a lasting power of attorney before, and understand that it is a legal document granting someone the authority to handle another person’s affairs. However, there is also something known as a business lasting power of attorney that is used for business owners. A business power of attorney grants authority to your appointed attorneys to run your business on your behalf, should you become incapacitated or unable to run it yourself. The level of control given to the attorneys can be tailored to suit your individual business and its needs.

A business LPA is a good idea for all business owners, as they ensure your company will remain in good hands even if something happens to you. Planning for the unexpected is always the smart thing to do, as you never know when a sudden illness or accident could leave you incapacitated. While a business LPA is suitable for all companies and business professionals, they are especially useful if you fit into one of the following categories:

• Sole Trader: Any person who is a sole trader needs a business LPA because they are not a separate legal entity to their business.
• Self-Employed Individual: Someone who is self-employed should obtain a business LPA so that someone can continue running the business in their absence. Otherwise, the operation could collapse quickly.
• Company Director: Any company directors should have a business LPA, especially if their incapacitation is not covered by the Articles of Association or Memorandum of Association.
• A Partner within a Partnership: If you are part of a partnership, you need a business LPA so that your attorneys can be your voice while you’re incapacitated. You want to ensure someone is representing your ideas and opinions so that the partner doesn’t make all decisions.

The world is unpredictable, and so is life. There is no way to predict precisely what will happen next or where you’ll be in the next year or beyond. For this reason, it’s essential to know that your business will be in good hands should anything prevent you from making decisions or running it as you usually would. There are many situations where you may need a business LPA to grant authorisation to a trusted person or team. Some of these situations include:

• Chronic Illness: If you are diagnosed with a severe illness or medical condition, like dementia, you may no longer feel confident in your ability to make business decisions. A business LPA will ensure someone is running the business as you would want them to.
• Accident: Serious accidents can leave you injured or incapacitated. In situations like these, it’s important to focus on your recovery and leave essential business decisions to someone else who has the time and energy to complete the work thoroughly.
• Unforeseen Circumstances: As a business owner, you may be required to travel for work. Any time you travel, there’s a chance your plans could be delayed by events beyond your control, like a natural disaster or civil unrest. In these cases, you need someone to act on your behalf for time-sensitive business decisions.

Without a proper plan in place, your business can face harsh consequences if you become unable to run things. Without an owner to make decisions, your business can fail in a matter of weeks, causing you to lose your livelihood and all the success you’ve gained. When you don’t have a business LPA, your business could face the following consequences:

• Frozen Accounts: If you are a business owner and lose the capacity to run your business, the bank can freeze all accounts rather quickly. This could be disastrous for your operations as no one will have access to necessary funds, making it impossible to do business.
• Mismanaged Company: Without a legally binding business LPA, the day-to-day operations of your business could be handed over to someone you don’t necessarily trust. A business LPA allows you the opportunity to appoint precisely who you want and sets specific rules about the authority they will have in your absence.
• Costly Court Proceedings: Without an LPA, employees of your business will have no legal claim to help run things in your absence. In order to gain this authority, they will have to obtain a deputyship order in the Court of Protection, which could take over six months and cost thousands in legal fees.