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succession planning untimely death

Business Succession Planning: Unexpected Death

While planning for retirement is a fun part of the succession planning discussion, we must also cover the less pleasant subject of planning for an untimely death. Most of this information also applies to a permanent disability as well. According to Forbes, three out of five business owners are left vulnerable to consequences of an unexpected tragedy.

It’s April 30 and a business owner client of mine (Bill) has passed away and his spouse calls me. The spouse (Maria) is in a panic. She has never been active in the software Bill owned. Bill died of a stroke just 3 days prior. Maria just came to the realization that she didn’t know if there was money in the bank for payroll on May 4.

Together, we went through a series of discussions that day. I was able to give her all the contacts Bill and I shared with the law firm and financial planner. I was also able to provide information for his payroll service, banker, and the bookkeeper that worked on Bill’s software company. Bill’s management team shared the same concern. Who would run the company, oversee decision making, and make sure clients did not leave?

Planning for this situation, is a challenge as people do not like planning for these unfortunate events. However, there are a number of basic questions and scenarios to consider now. This will help make the situation easier on your surviving family members and employees.

Questions and Scenarios to Consider
  • Do you have life insurance in place that goes to the business to provide a boost to the company’s cash flow should something happen to you?
    • These funds could be used to hire a CEO or consultant to run the company while things are figured out.
  • Have you thought about what you want to happen to the business if you pass away?
    • If so, have you documented it in writing and shared it with your spouse, advisors, and/or management team?
      • Things like:
        • Would you want the management team to use life insurance to buy shares from your estate and run the business as owners?
        • Do you want to leave the business to your children and have them run it? Or hire a CEO to run it?
        • Should the business be liquidated and sold through an M&A transaction? If so, how do you incentivize the management team to stay during this time?

It is impossible to plan for every scenario a business could go through but it is helpful to consider a few possibilities. It is a business that you have built and no one knows better what you want the next phase to be of your legacy, than you. Begin this process today. Have discussions and documentation to help build a succession plan that stands up to many scenarios but provides flexibility as your life and business grow and change. Let us know if you need help with your business succession planning – set up a no-cost consultation today!

resources

Resources for Small Business News

Are you a small business owner without go-to resources for your business news? It is important to stay on top of industry updates, events, and ideas that may impact your small business. However, we know that running a small business is no easy feat. When you have five extra minutes, you do not want to spend them sifting through news outlets, deciding what is trustworthy and worth reading.

In order to help with this, we are sharing a blog post by Meredith Wood of Fundera. Meredith provides readers with an organized list of resources including websites, blogs, and social media pages to follow. When utilizing this list, business owners will save time and have easy access to helpful advice and information.The list provided includes sources that will share the latest news and updates in capital expenses, loans, budgeting, forecasting, marketing, social media, taxes, HR issues, government standards, etc.

For example, one of our favorite suggestions in the list is New York Times: Entrepreneurship & Your Taxes. The New York Times is common reading material for most people but the particular sections Meredith mentions, we find important. The first one being Entrepreneurship and the second being Your Taxes. Both of these sections highlight subjects like small business tax, healthcare reform, and credit scores.

Click here for the 37 Best Resources For Small Business News

Top 10 Mistakes in Mergers and Acquisitions

The merger and acquisition process can seem daunting to someone who has no experience and isn’t working with a broker. Over the years we have heard a number of horror stories and have compiled the following list of the top 10 mistakes in mergers and acquisitions:

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IRS Business Owners

Interacting with the IRS: New Business Owners

Did you start or acquire a new business this year? If so, you may feel a little overwhelmed with the new responsibilities and you could be a little intimidated interacting with the IRS for the first time. The first thing you should do as a new business owner is get a tax ID number or Employer Identification Number (EIN). You can apply for this directly through the IRS online.

Your Tax Responsibilities:
  • File your business’s annual income tax return
  • Pay estimated taxes for you if you own a pass-through entity or for your C Corporation
  • Payroll Tax Activities: withholding, depositing payments, and filing employer tax returns
  • Submit information returns if you have independent contractors, maintain qualified retirement plans, or offer other benefit programs to your staff

You can and sometimes must handle certain tax responsibilities electronically. Many online activities can be facilitated utilizing government provided resources listed below. Not everything listed below may apply to you so remember to consult your accountant if you have any questions.

Depositing Taxes
  • If you have a payroll or make estimated tax payments, schedule your tax deposits in advance by using EFTPS.gov.
  • Transmit W-2s to the Social Security Administration
  • Submit copies of employees’ W-2s with an IRS transmittal form (Form W-3) to the Social Security Administration through the Business Services Online. This suite of services allows organizations, businesses, individuals, employers, attorneys, non-attorneys representing Social Security claimants, and third-parties to exchange information with Social Security securely over the internet. You must register and create your own password to access Business Services Online.
  • Remit Information Returns to the IRS
  • You may have to file annual information returns to inform the IRS about your payments to independent contractors you utilize. Complete this task through the Filing Independent Returns Electronically (FIRE) System
Filing Annual Retirement Plan Returns

If you want or need to file a form in the 5500 series electronically, do this through the Department of Labor’s EFAST2. This is an all-electronic system designed by the Department of Labor, Internal Revenue Service, and Pension Benefit Guaranty Corporation. The purpose is to simplify and expedite the submission, receipt, and processing of the Form 5500 and Form 5500-SF. These forms must be electronically filed each year by employee benefit plans to satisfy annual reporting requirements under the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code.

If you need assistance with any of the required tasks above, our professionals can help. Click here to contact us today!