News & Information

Home

Bay Financial Newsletter

BUSINESS PLANNING QUESTIONS

If you have an interest (if you don't, please share this with a friend or relative who has an interest) in a closely-held business, the answer to the following questions will be an invaluable guide to you and the planning professionals who advise you. It is essential to consider these questions if it is important that you keep your business "close," transfer it to those you love, assure that it will continue to provide income and financial security for those important to you, or create a profitable market for what might otherwise be an unmarketable business.

• How would the creditors of the business react if you or another shareholder died or became disabled for a long period of time?

• If you died or became disabled for a long period of time, would you want your family to retain the business? Sell it? To whom? At what price? Under what terms?

• Would you consider selling your business to key employees? Are there any that would want to buy it? Can they afford to buy it?

• When was the last time your advisors estimated the federal estate tax ("going concern") value of your business? How did they arrive at that figure? Is it realistic today?

• What would be the income producing ability of the business - assuming you weren't here to direct it?

• Who would control your business at your death or disability? Can (will) that same person run the business? If not, what have you done to avoid conflicts and reduce the conflicts of interest between those parties? Who are those persons?

• Which members of your family are in the business now or are likely to enter into it in the near future? How long will it be before they are capable of earning a decent salary and contributing in a meaningful way to the profits of the business? What part of your business is your son or daughter interested in? Are the members of your family who will be working in the business not only physically capable but emotionally able, not only to work in the business, but to actually run it?

• Who will operate the business until your designated successor is ready to take over? What have you done to keep that person in the business, and happy to build/strengthen someone else's financial future?

• What have you done to provide security, or to "even things out," for those members of your family that will not be coming into the business?

• How comfortable would you feel being in business with your co-shareholder's (partner's) widow (widower)? How comfortable would your co-shareholder (partner) be being in business with your widow(er)?

• If your business partner was disabled for four to six months, would you want to continue his full salary during that time? Would you be able to? If that disability became permanent, how long could you afford to pay that salary?

As always, we are here for you. Feel free to call to discuss these or other issues of interest.