Selling Your Family Business

Whether we’re coming out of the recession is still very much in debate. Nevertheless, at least for some small businesses, the balance sheets are starting to look a bit better.

Having weathered the storm, some business owners are now ready to get out. According to a recent New York Times article, 2012 is going to be the time to sell the business for some owners.

“Buy low, sell high” is conventional market wisdom. To some business owners coming out of the rut with a good year behind them, right now may be the “high sales” they’ve been awaiting. Yet for some investors right now may still be the “low buys” with an eye for growth.

Behind the scenes, however, there’s more than simple market dynamics afoot in 2012. As you may recall, it also is the last year of the Bush-era tax cuts as they were extended only until the end of 2012.

So, if you’re looking to sell the business, then 2012 will offer a lower capital gains tax rate, at 15% instead of the 20% slated to fall into place come next January.

If your business IS your personal wealth, then this is real money for your future and for your family’s future.

Why are you waiting? Unless you intend to keep you family business in the family, the tax planets are beautifully (albeit temporarily) aligned with those same Bush-era tax cuts in place – and the generous Gift and Estate tax levels.

Accordingly, I recommend a consultation with your trusted accounting, legal and financial advisors without delay. At Idaho Estate Planning we have a network of resources to help you accomplish your goals. Let’s work together and initiate a plan that works for your individual circumstances. Remember, good planning is no accident.

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Business Exit Planning – Begin With The End In Mind

If you are a small business owner, then you know planning for your finances and your estate is not that simple. In fact, you and your business need to plan together, and that means succession or exit planning.

For added incentive and another horror story on the subject, take a look at a recent article on the Wealth Counsel blog. It’s the story of three businessmen that proves both the necessity for planning and the necessity of understanding the plan.

These three businessmen were at the head of a once-prosperous construction company and even had the proper forethought to set out an agreement ahead of time. Of course, the economic meltdown hit the construction market fairly hard and that company turned south fast. As a result, the three put their own funds into the company by way of personal loans just to keep it afloat.

One of the partners then contracted and succumbed to a terminal disease. In turn, this prompted the question of how his life-insurance funds ought to be distributed and the role of his stake in the company. Naturally, the surviving spouse thought she was to be compensated for her husband’s interest in the company. On the other side of the table, however, the surviving partners thought the business was owed some of the life insurance money (to help pay off their personal loans to the company).

It was, essentially, a mess.

Thankfully, on the basis of the existing plan – even if it wasn’t as comprehensive as it ought to have been – the parties were able to come to a compromise.

Teaching point? It goes to show that even a little planning is better than no planning. Otherwise, the case may have become fodder for protracted litigation and huge legal fees. Still, it is essential that all parties understand the plan and work to affect it in the intended spirit.

At Idaho Estate Planning we are the experts you need to know and trust. Work with us and we’ll put together a plan that works for you and your loved ones. Remember, good planning is no accident.

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LLC Planning For Your Family & Business

When it comes to understanding your estate and planning for it, the key concept is ownership. How do you own your assets? How should you own your assets? How can you easily pass along this ownership to your loved ones?

When it comes to business assets, whether in the context of ordinary day-to-day operations or as a business owner setting up your estate plan, ownership is still the name of the game. One question that arises, then, is whether your assets should be spread across separate or multiple LLCs.

I came across a recent article in CPA Magazine and, according to the author, whether you should start splintering your assets into multiple LLC depends a great deal on what you hope to accomplish. No surprise there.

However, to many it’s simply a question of liability and risk protection, but then there are other goals. Namely, splitting into multiple business entities will allow your company to move the ownership of assets around between family members or employees without necessarily dividing the business.

This can be accomplished with some careful planning, corporate due diligence, and transactions like the sale-leaseback or, more in the vein of estate planning, the gift-leaseback. In that latter play, the business owner either leases or gifts the asset away and then immediately leases it back, thereby spreading ownership but retaining the operations of the company. Of course, not all business assets are well equipped for this practice, but others are perfectly positioned, especially those that deal in large equipment or vehicles.

It’s not quite as simple in practice, and diligence is a necessity, but for many small and family owned businesses this fractured structure will allow a great deal of leeway.

Whether it truly is right for you will take some thought and competent counsel at your side. In the end, it all comes down to your own unique goals, first for your business and second for your family. At Idaho Estate Planning we have the resources and expertise you need to implement the right kind of estate plan for you, your family and your business. When it comes to your family business, good planning is no accident.

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Tax Planning – Small Business, LLC, & S-Corp Owners

The end of the year is quickly coming upon us and we haven’t even had our Thanksgiving turkey. Regardless, if you’re a small business owner, it means a great deal of tax planning is needed to protect what you have earned. To that end, Businessweek has an end-of-year checklist for your consideration.

The key for the small business person to remember, especially if you’re just starting out or in the process of an expansion, is that 2011 has some special deductions for new equipment. According to the tax and jobs bill passed in 2010, small companies can deduct the full cost of equipment purchased (new or used) up to $500,000 (i.e., twice what was possible in 2010 and several times the scheduled amount of $125,000 for 2012).

Normally, the deduction is limited to the depreciated value of items over their life. However, if you do purchase more than $500,000 worth of equipment (up to $2 million), then you can use special “bonus” depreciation. There’s much that can be done with these deductions and you also might consider pushing your purchases into this year and even pre-paying them.

In general, if you’re a small business owner, then your company likely is to be rather entwined with your “personal life.” Additionally, if you are at the helm of an S-Corp or an LLC this is especially relevant and you’ll want to consider how your business finances and personal ones fit together for tax purposes. Estate planning in these situations requires experience and expertise like you’ll find at Idaho Estate Planning. Call us today to arrange for a consultation. Remember, good planning is no accident.

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