The U.S. Chamber of Commerce notes that over 99% of businesses in the United States are "small businesses." Did you know that 99% of U.S. business owners can protect their business through business succession and estate planning? Succession and estate planning help small business owners protect their business and all the hard work they’ve invested in building it.
Key Takeaways of How 99% of U.S. Business Owners Can Protect Their Business:
- There are too many potential life interruptions (often referred to as "triggers") in one or more of the company's owners that can disrupt an unprepared small business. These include, but are not limited to, death, incapacitation, serious illness, disability, divorce, bankruptcy, injury, changing market or economic conditions, or even retirement. It doesn't matter if there is only one owner, or several partners, members, or shareholders in the company.
- A small business can lose more than half of its value in just a few months following a significant life event affecting the owner.
- Failure to plan can result in cash flow challenges, disputes over ownership and valuation, tax issues, breaches of contract with suppliers and customers alike, loss of key employees, as well as unnecessary expenses and delays associated with probate.
Succession and Estate Planning is How 99% of U.S. Business Owners Can Protect Their Business and Associated Investment(s)
What is the answer? Succession and estate planning is how 99% of U.S. business owners can protect their business and associated investment(s). A small business owner's estate plan should provide trust protection for their LLC, C Corporation, S Corporation, or other business entity. Estate planning for small business owners can be quite complex and should incorporate the tax planning and legal protections from the perspective of the company and its owners. Typically, the ownership interest is placed within the protection of a revocable trust, accompanied by a "pour-over" will to capture any assets that may be inadvertently missed or accumulated after the trust has been established.
The goal of most business owners is to sell at peak value when another opportunity arises, or at retirement. In other cases, the owner may wish to provide a legacy and pass their company on to children, heirs, and/or beneficiaries.
The small business owner's estate plan should also provide for stability during significant life challenges, such as a divorce, an unexpected accident, or a medical emergency that incapacitates the business owner, as well as the financial difficulties that a personal bankruptcy might present. Look for a law firm that offers integrated succession and estate planning, as well as tax planning for small business owners.
The process should provide a thorough review of your current succession planning and estate planning, as well as all aspects of your company, to ensure that all issues are addressed. If you conduct international business, hold offshore financial accounts, or have an interest in a foreign business, you’ll need international legal and tax advisors who are prepared to offer strategic insight and tax guidance relating to FBARs and FATCA compliance while extending the protections of the attorney-client privilege.
Integrated legal, tax, accounting, business advisory, and estate planning services are the answer to how 99% of U.S. business owners can protect their business and associated investment(s). A well-conceived and executed business succession and estate plan provides maximum protection for your own interests, as well as your company, while enhancing the financial value of any ownership interest when it is time to sell existing interests, or to pass all you've worked so hard to build from one generation to the next.
It is essential to develop a plan of action now, before unforeseen life events render it impossible to do so.
