As the owner of a small business, you are likely a crucial part of its day-to-day operations. What would happen if something unexpected happened to you and you were unable to perform your usual duties?
Such disruptions would likely have a significant negative effect on your business’s present and future, unless you had properly planned for this possibility. It can be difficult to plan for all of life’s uncertainties, but there can be options to help you plan for some of them.
A financial power of attorney is a document that allows you to select an alternate decision-maker for personal, financial and/or business matters. It grants someone, called an agent, the authority to act on your behalf. If you make your power of attorney durable, your alternate decision-maker will continue to have this authority if you become incapacitated.
As an individual, this document can help you ensure that your bills will be paid and your money will be managed, even if something happens to prevent you from doing these things yourself. However, as a business owner, a power of attorney could be even more important. As a business owner, it can mean the difference between your business surviving your incapacitation or not.
This does not mean that the same person who manages your personal matters needs to manage your professional ones. In some cases, this could even be disastrous. The person you trust with your personal finances may not have the expertise or the time needed to properly handle the day-to-day responsibilities to your business.
A practical alternative may be to appoint multiple agents and limit each agent’s authority. In effect, you could have one agent who has the authority to manage your personal finances and another agent to manage your business affairs.
Preparing for your future and the future of your business can mean different things in different situations. Creating a power of attorney may not always be the best solution, but it can be an effective way to make sure someone you trust has the authority to make important decisions in case something prevents you from being able to make those decisions yourself.