Small business owners play a crucial role in the economy. They form the backbone of local communities and contribute to innovation and employment. An invaluable yet often overlooked tool for them is Economic Ownership Rights (EER). This article delves deeper into what EER entails and its benefits for small business owners.

What is Economic Ownership Rights?

Economic Ownership Rights (EER) is a legal structure where one person or entity is the economic owner of a property while another holds the legal ownership. In essence, the economic owner is entitled to the benefits and assumes the risk of value changes, while legal ownership is held by someone else.

Benefits of EER for Small Business Owners

Financial Flexibility

A key advantage of EER for small business owners is the financial flexibility it offers. It enables entrepreneurs to utilize capital-intensive assets without the need for substantial cash investments, thereby keeping more liquidity available for other business needs like marketing, staffing, and inventory.

Risk Management

EER provides small business owners with more effective risk management capabilities. As the economic owner bears the risk of value changes and damages to the property, the legal owner is safeguarded against these potential risks. This is particularly vital when purchasing costly equipment or real estate.

Tax Benefits

A well-structured EER can offer tax benefits for small business owners. Depending on the business's legal and fiscal situation, certain expenses and depreciations can be attributed to the economic owner, resulting in reduced tax liabilities.

Improved Creditworthiness

By enhancing a company's liquidity and managing risks, EER can bolster its creditworthiness. This can lead to more favorable terms when securing loans or entering financial agreements.

Focus on Core Activities

With EER, small business owners can focus more on their core activities. By relinquishing the burdens and concerns related to owning specific assets, they can concentrate on growing their business and delivering value to their customers.

Conclusion

Economic Ownership Rights (EER) is a valuable yet often overlooked tool for small business owners. Through financial flexibility, risk management, tax benefits, improved creditworthiness, and a focus on core activities, EER can significantly enhance the growth and stability of a small business. It's essential for small business owners to consider the potential of EER. For further insights, Share Council is available for a brief call to fully harness its potential.