When most people think about planning for the possibility of incapacity, they often focus on their personal affairs. However, small business owners should think beyond their individual needs and consider whether they should make specific arrangements to ensure that their incapacity doesn’t incapacitate their business.

A power of attorney allows someone we trust to step into our shoes if we are unable to manage our affairs. Sometimes, the authority is effective immediately. Other times, it only becomes effective upon incapacity, meaning the inability to manage one’s affairs due to temporary or permanent impairment.

Small business owners often act as if “I am the business and the business is me.” Under ordinary circumstances, it works. But it overlooks what happens to your business if you’re suddenly unable to run it.

Consider this scenario: Jake owns a small contracting company structured as an LLC. The company has six employees. He founded it before he got married and has always run it personally, with help from a bookkeeper. Jake is the only authorized signer on the company’s bank account. Every two weeks, he signs payroll checks. He also signs checks to pay suppliers.

Jake’s wife, Samantha, helps around the office. She has no formal management role and no signing authority.

Jake once had a friend whose bookkeeper stole from his company. As a result, Jake has always insisted on being the only signer on the company’s bank account.

Jake’s power of attorney designates Samantha to address his financial affairs if he cannot.

Now, Jake is seriously injured in an accident. If he survives, he faces months of recovery. He won’t be signing checks anytime soon. Payroll is tomorrow and a key supplier’s invoice is due in five days.

What happens next?

First, Samantha must navigate both her husband’s medical emergency and the business. Even assuming she is emotionally ready to step in, she faces practical hurdles.

Because Jake’s power of attorney only takes effect upon incapacity, Samantha needs written proof that Jake is incapacitated. She can get that from a doctor who has examined or treated Jake. In theory, that sounds straightforward. In reality, doctors are busy and can be difficult to communicate with. So, getting a letter may take time.

Meanwhile, payroll is due.

Once Samantha obtains proof of Jake’s incapacity, she must get the bank to recognize her authority to sign on the company’s accounts. If the document clearly authorizes this, the process may go smoothly. If it is vague — or if the bank’s legal department is cautious — she could face excruciating delays. Worst-case, she may need court intervention.

And remember, employees need to be paid on time. While some may be able to be patient for a day or two, for other employees, a day or two without a paycheck could result in their family being evicted from their home or other disastrous results. If payroll isn’t met, there is legal liability and employees may leave. The big supplier had better get paid too.

Advanced planning with an eye toward business continuity could help avoid damage to the business and prevent Samantha from enduring unnecessary work and stress.

One possibility is that Jake could have made Samantha — or a financial professional — a co-manager or signer on the company’s bank account. As with the power of attorney, managerial authority could be limited to circumstances in which Jake was incapacitated.

If trust is a concern, there are tools to address that. A fidelity bond, for example, protects against employee theft and dishonesty. The underwriting process itself adds scrutiny. Alternatively, a professional fiduciary with appropriate insurance or a chartered trust company could serve in a limited role as a financial agent for the company.

Another practical step is reconsidering the use of powers of attorney that only become effective upon incapacity. While it may feel safer to require proof of incapacity, a delay in confirming incapacity increases operational risk and diminishes effectiveness of the plan. If you would trust someone with your finances when you are incapacitated — when you won’t be able to “look over their shoulder” — it is worth asking why you would not trust them while you have capacity.

In a business with multiple owners, problems compound even more easily than in a single-owner business. The power of attorney has less effect, so disputes become more likely, and operations can suffer at the worst time.

If your livelihood depends on a closely held business, talk to your attorney about how the company would function without you.

Shea Meehan is an attorney and the estate and business planning liaison at Cornerstone Wealth Strategies, headquartered in Washington state and servicing clients nationwide. The opinions voiced in this material are for general information only and not intended to provide specific advice or recommendations for any individual or entity.