M A writes: I am a sole trader and bought my business premises with a loan. What are the pros and cons of paying it off early? It is possible that we will move in the next year or two and will sell these premises and rent new ones.

Before paying off the loan, you should think about whether there are better uses for your surplus funds, writes Jon Sutcliffe, partner at Kingston Smith LLP. You should also check to see whether you will incur any charges by repaying the loan early, and whether these will change significantly in the next year or two when you sell the property.

The loan interest you are paying is probably tax-deductible, which, depending on your circumstances, reduces the effective cost of the loan. If you have other borrowings on which the interest is not tax-deductible — for example, a home mortgage — you may be better off repaying those borrowings first.

Alternatively, if you have no other borrowings, you should consider what returns you will get on the funds by using them in your business, or by investing them. You should take into account any tax you will have to pay on income from savings.

Given the current economic climate, there are risks in restricting the working capital in a business. You should review your business forecasts for the next two years to be sure there is adequate scope for taking the capital out of your business without risking the income you personally need from the business.

Cracking down skiving workers

W J writes: One of my employees is taking too much time off work. At first his excuses seemed to be genuine but he now calls in sick at least twice a month. On the last occasion he called in sick for the day, one of my employees spotted a Facebook entry on which he said he was recovering from a hangover after a drinking session. Is this enough evidence to discipline him?

Now that there are so many forms of communications it has become more difficult for workers to skive, but you must not act on suspicion alone, writes Peter Done, managing director of Peninsula. All employees should be treated fairly and without blame until any alleged misconduct is proven.

I would suggest you invite your worker to an informal private discussion when he gets back to work. Remind him of the importance of attendance and express your concerns about his recent level of absenteeism. Quiz him closely about why he was away and take notes on his answers.

If he gives a specific health reason for his absence, then a number of possibilities arise. For example, reasonable adjustments should be made for any employee who could be considered to have a disability. This can be a complex area, involving medical reports.

You can withhold statutory sick pay if you have good reason to suspect the individual is not ill. If you want to stop sick pay to an employee after four or more absences in a year, seek adjudication from HM Revenue & Customs Medical Services.

If the employee’s poor attendance is not health related, you will need to consider formal disciplinary or capability action as laid out in your own procedures.

Overall, the best policy is to closely monitor all absence and have “return to work” interviews each time a staff member comes back after an absence. Make notes on what was said in these interviews. This paperwork should be kept so that you can measure the problem throughout your business and to ensure a consistent approach to dealing with absence. When employess see that your are taking sickness absence seriously, the errant ones will soon change their behaviour.

Kingston Smith LLP, the chartered accountant, and Peninsula, the employment-law firm, can advise owner-managers on their problems.

Send your questions to The Business Doctor, The Sunday Times, 1 Pennington Street, London E98 1ST, or fax to 020 7782 5765. Advice is given without legal responsibility.