Essential ways to protect your business
As a business owner, you take on a lot of risk; indeed, even the act of starting your own business is risky. So, once it’s up and running, you are unlikely to want to consider a time when you cannot run it yourself. But to protect your business, you must think of all eventualities.
In the US, there is something called a Business Power of Attorney (BPOA) or Business POA. This legal document ensures the continuity of your business if there ever comes a time when you cannot make decisions relating to it anymore.
In this article, we will look at what a BPOA is, how it can help protect your business, how to create a BPOA, and its advantages. Take a look below to find out more.
Understanding Business Power of Attorney (POA)
A Business Power of Attorney is very similar to other forms of Power of Attorney. A POA is a legal agreement between two parties, known as the principal and the attorney-in-fact (or agent). Though the word attorney appears in the name, the attorney-in-fact does not need to be a lawyer.
A POA gives the attorney-in-fact the right to act for the principal in an array of matters, though matters may alter depending on the kind of POA you have.
A BPOA allows the attorney-in-fact or the agent to make business-related decisions. This could include signing contracts, making financial decisions, and entering binding agreements.
A BPOA comes into effect in the event that you, as the business owner, can no longer make decisions. This could be due to a period of ill health or due to declining overall health. You may also authorize someone to have POA when traveling to sign contracts on your behalf.
How does a Business POA protect my business?
Protecting your business is essential. If left unprotected, it may result in the loss of your business as a whole. But what does creating a BPOA have to do with protecting your business?
To begin with, a BPOA would take the reins if you were ever to fall ill or become incapacitated somehow. You cannot predict something like this, so having a BPOA in place before the event would mean the business is not left in limbo while you cannot make decisions.
A BPOA can also ensure that your wishes are followed. In the event you cannot make decisions, other parties, like business partners and family members, may dispute certain actions. Having a BPOA gives them the ultimate say, and you can avoid costly and time-consuming disputes.
Another key way that a BPOA can protect your business is by simply ensuring its continuity. If a business owner is absent for whatever reason, then day-to-day operations, signing of contracts, and general business decisions will all be put on hold. A BPOA can take these things over and ensure everything runs smoothly while the owner is absent. This means that things won’t have fallen apart when you come back.
Lastly, a BPOA will protect your business assets. This means that the business’s finances will remain stable without the owner.
Creating a Business POA
You need to take a few steps to create a business POA. These are as follows.
- Choosing an agent: The first step is picking the person you want to have POA should you be absent. This person could be a business partner, a trusted employee, or a family member. It is crucial that you choose someone you trust to continue your work and carry out your wishes. This person does not legally need any qualifications, but you may want to choose someone who understands your business industry.
- Scope of powers: Next, you will need to define the scope and limitations of the agent’s powers. As addressed above, a POA is sometimes only used to sign a contract when the business owner cannot attend, like when the signature takes place overseas. Make sure you have defined everything you do and don’t want the agent to be able to do.
- Building in contingency: Since you don’t know what might happen, you will also need contingency built into the plan. This means naming a successor to your agent should they, too, be unable to continue your work.
- Legal compliance: Lastly, you must ensure that your POA agreement is legally binding. We recommend working with a lawyer throughout the process to ensure that it is all compliant and cannot be challenged if you were to become incapacitated.
Benefits of implementing a Business POA
There are many benefits to implementing a BPOA. These are as follows.
- Smoother transition: In the unlikely event that you suddenly become incapacitated, having a BPOA will ensure a smooth transition. In fact, it will hopefully be like nothing has changed for your employees. It means business continues normally, and things are running as they were when you return.
- Safeguard interests: Building contingency today can protect your business assets and finances because we don’t know what will happen tomorrow.
- Peace of mind: Whether you’re just planning for the future or going in for surgery for a health condition, knowing that things will be taken care of for you in your absence can bring peace of mind to your operations.
Final thoughts
Business Power of Attorney allows you to protect your business in the event that you can’t do so yourself. There are a few considerations to make before implementing your own, and we recommend seeking legal advice to ensure everything is compliant.
