For the small business owner who does not plan to pass down the business to the next generation, it is imperative to consider what will happen to your business upon your death or permanent incapacity. All too often, surviving family members end up with far less than what the business was worth when plans were not made ahead of time that prevent such a result. One option is to enter into a Buy-Sell agreement. A Buy-Sell agreementguarantees the fair market value of your interest in the business in … [Read more...] about Do I need a Buy-Sell Agreement?
If you plan to pass the business down to the next generation it is really never too soon to get started.One popular way to do so is to create a Family Limited Partnership (FLP). An FLP allows you to transfer your legal interest in the business to the next generation slowly, over time, while maintaining control over the day to day management of the operation until such time as you are ready to retire. Along with providing a slow transition of ownership, you may be able to gain tax advantages by … [Read more...] about Is a Family Limited Partnership right for my business?
Small business owners often make the mistake of assuming that an adult child or senior employee is willing to take over the management of the business upon the death, or even retirement, of the owner, only to find out too late that their assumption was wrong. Of equal importance is ensuring that the individual you designate to step in and take over has the requisite legal authority and practical capacity to do so. A well thought out succession plan will ensure that a successor is ready to step … [Read more...] about What is management continuity?
While your death would certainly create a giant vacuum in the operation of your business, so would your incapacity. Although people often associate incapacity with old age, the reality is that incapacity can strike the young as well. If you do become incapacitated, even for a relatively short period of time, it could be devastating for your business if you didn’t plan for the possibility. Who would take over the day to day management of the business? Who would negotiate contracts with suppliers … [Read more...] about What is incapacity planning and why is it particularly important for a small business owner?
Every taxpayer’s estate is potentially subject to federal gift and estate taxes upon the death of the taxpayer. If you own a small business, that business may become part of your estate and, therefore, be subject to estate taxes. The problem is that many new businesses, as well as certain types of businesses such as ranching and farming operations, can be short on liquid assets. The value of the business is often tied up in start-up expenses, inventory, equipment, livestock, and other non-liquid … [Read more...] about Why is planning for the impact of gift and estate taxes particularly important for a small business?
Like the rest of your estate plan, your business succession planning component will be uniquely tailored to fit the needs of your business and to fit within your larger estate plan goals. There are, however, some common objectives you may wish to include in your business succession plan, such as: - Designating of someone to take over the immediate day to day control of your business if you are incapacitated tomorrow because of a catastrophic accident or debilitating illness. - Ensuring … [Read more...] about What should be included in my business succession plan?
Most business owners know they need to protect their business from common threats such natural disasters, theft, and fire. In fact, one of the first things you probably did when you decided to start your business was to purchase insurance that would compensate you in the event of a covered loss. Imagine the potential loss to your business, however, if something happened to you. Without your guidance and management, everything you worked so hard to build could fall apart in a relatively short … [Read more...] about Why do I need to include business planning in my estate plan?