If you and your spouse complement each other, work well together, and support each other, does it makes sense to go into business together? Can you effectively be partners in marriage, partners in parenting, and partners in business? Although it may not be easy, many couples have proven that the answer is yes—a business partnership with your spouse can be very rewarding.
As rewarding as it can be, there are a few steps that must be taken in order to protect your partnership—inside and outside the office:
- Have a detailed plan that you both agree on
- Be specific about each of your job descriptions to avoid stepping on each other’s toes
- Agree on the amount of risk you are both willing to take
- Know each of your strengths and weaknesses
- Have a safety net
- Be sure you are both contributing to your own retirement plans
- Don’t skimp on the paperwork; have an attorney draft the documents you need to protect your business and your personal assets
- Plan personal time together when work is “off-limits”. Vacations, regular date nights, a business cut-off time—all of these can be helpful in setting boundaries and preserving the romance
- Hope for the best, but plan for the worst: have your attorney help you draft a buy-sell agreement in the event that one (or both) of you someday wants to gracefully step down
Being in business with your spouse can be paradise or perdition, and at times it will probably be a little of both. Each family—and each family business—will be different, and our office can help you navigate the tough legal terrain to find the best fit. Being prepared and taking the right legal steps will bring paradise a little closer by allowing you to relax and enjoy what you and your spouse have built together. Whatever your arrangement, don’t neglect the future. In business, having a good plan is the best protection there is.
Jane Austen once wrote “There will be little rubs and disappointments everywhere, and we are all apt to expect too much; but then, if one scheme of happiness fails, human nature turns to another; if the first calculation is wrong, we make a second better.” Such an (eventually) optimistic philosophy is good to have in the economic times in which we find ourselves now, when the unemployment rate is a staggering 8.5%. With more than 5 million jobs lost since the recession began, people are finding that there is indeed a need for resiliency and creativity, and those who are able to “turn to another” scheme of happiness will fare better than those who steadfastly hold out hope for the old ways.
According to this article in USA Today, more and more people are getting creative in their schemes for happiness, and many are doing so by starting small businesses after they are laid off from large companies. In fact, a small business is not at all a bad place to be right now, considering President Obama’s recent announcement regarding ”a small-business financing plan that includes reduced loan fees and incentives for banks to do more lending.”
If you are one of these brave people who have chosen to combat economic conditions by creating your own small business, remember that going from being an employee to being “The Owner” brings with it many changes, not the least of which are changes in your estate plan. Small business owners tend to be less liquid than traditional employees, putting much of their earnings back into the business for growth, which means estate planning for business owners requires a different strategy than for other families.
Whatever your scheme or situation, our firm can help you create the right plan to protect your assets and your family.
The Wall Street Journal says that family limited partnerships are finding renewed favor as an estate planning tool, thanks to recent tax-court decisions.
In an article entitled “Covering Your Assets” Journal writer Mark Klimek asserts that despite some IRS opposition, tax court rulings in recent years have endorsed the use of FLPs when they are used to preserve a family business for future generations.
“Setting up such a partnership could be especially useful right now for families with businesses,” according to the article. “The Obama budget calls for the estate tax to be restored next year at a rate of 45 percent for estates worth more than $3.5 million, or $7 million for couples. Income-tax increases for high earners are on the agenda as well.”
The article goes on to describe many of the dos and don’ts of FLPs, but of course each family’s situation is special, and you should consult an estate planning attorney before making decisions about any specific strategy.
In any case, the time to act is now. According to one expert quoted in the Journal article, “There’s a realization that any kind of estate planning you can do this year is good, because 2009 will probably end up being the most favorable year for taxes ever.”
We live in anxious economic times, but it’s not all bad. If you’re a small business owner, or if you’ve been thinking about starting a small business, you may be in exactly the right place. According to Stephanie Chen of CNN.com, this may be the perfect time to take the leap you’ve been thinking about for years and start doing what you love.
In a time when big businesses are dumping cargo like crazy just to stay afloat, the small, independently owned businesses—which are less top-heavy and have fewer overhead expenses—are perfectly positioned to make it to the finish line.
If you are planning to jump in and start your own business, desire and a dream will only get you so far. You also have to have a plan. Steve Leer states in his article that your entrepreneurial success depends on how much forethought you’ve put into your business. Unfortunately, this is where new entrepreneurs can tend to get stuck. Our firm can help you get past the daunting early stages of writing a business plan, filing paperwork, and creating entities; leaving you to enjoy the active part of your business—working with clients or customers, hands-on creation, artistry, or production.
Our firm finds inspiration by helping our clients achieve their goals. Let us help you do what you find inspiring as well.
Big corporations may be laying off employees in distressingly record numbers, but big corporations are not the only employers in the U.S.—as long as we have our small business community, all may not be lost. According to this article on Reader’s Digest.com, small businesses are taking the economic downturn in stride, and in some cases even doing well, “small businesses account for more than 60% of jobs in the U.S., and many of them are holding on to their staff or growing.”
But not all small businesses are created equal, and we aren’t the only ones who think so. A new study by the Wall Street Journal itself found that “entrepreneurs who engage in business planning early on are more likely to… get a business off the ground.” The article focuses mainly on a business plan, which is indeed one of the most important start-up documents you can have, but advance business planning can include these other documents as well, many of which require experienced legal advice:
If current economic circumstances have you thinking about starting your own business, come into our office and let us help with the advance planning. We care about our clients, and are invested in seeing you accomplish your goals. We want to help give you and your business the best possible chance for success.
It used to be that people stayed at one company—one job—for their whole lives. Employers were benevolent, and almost part of the family; took care of families, once upon a time, offering health care coverage, life insurance, retirement packages… all this and an annual company picnic to boot!
As we all know, the world is a different place now. Very few people stay at one company longer than a decade, and not even that long if you’re under the age of 30. There is, however, one exception to this… if you’re self-employed.
As an estate planning firm, we meet with a good number of self-employed clients and small-business owners, and one of the most important things we can convey to these clients is how very, very important it is to have an effective estate plan. As S. du Plessis states in her article Estate Planning for the Self Employed: A Helpful Guide, “I am so responsible in other areas of my life, I feel compelled to be responsible about my death too. Plus, I hate to fail, and those who fail to plan. . . fail. So in fairness to my husband and children and because I own a business (which complicates my estate), it’s time to come up with an estate plan.”
Du Plessis is absolutely correct that failure to plan—especially for small business owners—can have disastrous consequences for both their families and their businesses. When you are so responsible in all other areas of your life, why let the ball drop in this one area? Especially when it’s your family who will end up suffering?
Small business owners spend so much of their time taking care of other people, we think it’s time that someone helped take care of them. Our office can help preserve the legacy you’ve worked so hard to build—for both your family and your business.
Small business owners tend to be a smart, dynamic, and an especially opinionated lot. After years of running the show, you’ve gotten into the habit of doing things your way. And when the time comes to sell your business you want to do that your way as well. But is that even possible?
The answer to that is yes and no. It is the very act of doing things your way that has made your business as unique and successful as it is; you don’t want to change that now. Not to mention, you want to make sure that your interests are met when a deal is finally brokered. That being said, there are some things you can do—and people you can talk to—that will make the process of selling your business a lot quicker, a lot smoother, and a lot more lucrative.
This article from US News and World Report shares 10 Key Moves When Selling Your Business. Two of the ten moves mention getting the help of your accountant and the help of a professional broker. To this we would add getting the help of your attorney. Numbers 5 and 9 are going to be essential when it comes down to solidifying any deal, and our firm can help ensure that all of your legal and regulatory affairs are in order.
But what about the down market? Perhaps you’d like to sell but think it just isn’t an option while this financial fiasco is still going on. Not so. According to Loraine MacDonald in her article for Entrepreneur.com an economic downturn may in fact be a lucrative time to sell if, as she puts it, you have the right “three stars aligned” at the same time.
Whether you’re thinking about selling right now or much later, it’s never a bad idea to do the research and put your business affairs in order. As MacDonald mentions in her article, there are any number of unforeseen events that could end in the sale of your business at an unexpected time. The more prepared you are the best chance you have of getting the best buyer for your business at the best price—and of course, doing it your way.
It takes a certain type of person to be a successful small business owner; someone resourceful, optimistic, and willing to work hard and take risks. People with these qualities aren’t going to feel daunted by a recession or slow economy. In fact, some will even look with relish upon the challenge it presents. One recent article in the New York Times, Betting Your Retirement on Your Startup, highlights exactly this resourcefulness.
Not about to let the panic on Wall Street slow them down, certain determined entrepreneurs have chosen to forgo investors and small business loans. Instead, they have taken the plunge on their own by investing their retirement savings in their own small business venture. “It’s a risky strategy,” writes author David S. Joachim, “one that has business owners essentially betting their retirement on their company.” But a willingness to take risks is exactly the quality that can make business owner a success.
Of course, a willingness to take risks should not translate into rash decision-making. A strong legal and investment background will be required to make this particular strategy, one that Joachim says is “so novel that many business analysts, tax experts, and even Internal Revenue Service officials said they had never heard of it” work for your company. In situations such as this, serious research and quality advisors can mean the difference between success and failure.
Our firm has worked hard to serve small business owners in the past, and we intend to continue helping our entrepreneurial friends far into the future, through times both lean and robust. Call our office for help moving your business in the right direction.
Small business owners are some of the hardest working people I’ve ever met. They not only take their work and their clients seriously, they take them to heart . . . sometimes to their detriment. Yes, hard-working small business owners can take on too much. They give up family time and workout time; they lose sleep and lose perspective. All of this will not only take its toll on their health, it can be costly to their business as well. Like a trapeze artist working without a net, small business owners need to find balance–or else.
Recent studies have shown that two-thirds of small business owners (many of whom left big corporations to spend more time with their families) work more than 40 hours a week; with one in five actually putting in 80 hours a week! If you’re a small business owner reading this you probably have some experience with this yourself. How often have you read e-mails during dinner, taken phone calls from clients on weekends, or taken the family with you on a business trip to double up the time as “vacation”?
Why do small business owners find it so difficult to find balance? John Wyckoff believes it’s because too many of them spend all their time working “in” rather than “on” their business. CBS News posits that perhaps people have a hard time drawing the line between on-call and off-duty when both business and family happens in the same physical space. And the Entrepreneurial Connection thinks that small business owners would be much better off if they knew more about (or were willing to take advantage of) time-saving opportunities and devices. Whatever your reason, finding a balance between work and pleasure is essential for small business owners. And as unlikely as it may seem, your attorney can help you find that balance. Whether by helping your business make that transition to the next level, by putting legal protections in place to keep your family finances safe from business lawsuits, by updating your business plan, or working with you on an eventual exit strategy. However you choose to do it, the best way to take care of your business is to take care of yourself. Start taking care of both today.
Most of our small business clients probably already know that the federal minimum wage increased this week from $5.85 to $6.55 an hour. The increase is the second in a three-step process to bring the minimum wage to $7.25 an hour next year.
The increase will help workers deal with soaring energy and food costs, as described by Christopher Rugaber of the Associated Press, but many entrepreneurs are wondering if the increase will adversely affect their businesses. In fact, according to an article by Angus Loten in Inc.com (published last year when the increase was first approved by the House of Representatives), most small business owners will not be hit by the increase, because they already pay their employees more than the state or federal minimums.
There is a web of interconnectedness in small businesses that is more readily apparent than in large corporations, which means that small business owners often can’t help but see and react to the financial well-being of their employees. Loten, in his article, quotes Mark McCurry, the president of a small Atlanta-based delivery service as wondering “how you could pay anyone less than [the minimum wage] in good conscience?”
This seems to be the prevailing opinion of small business-owners across the country, who, according to Inc.com, generally pay employees more than minimum wage anyway, and 70% of whom reported that “raising the federal minimum wage would have little impact on their labor costs.”
Small business owners are struggling just as much as the next person with the current record inflation levels, but in an intimate work environment where the boss works side by side with employees, it’s difficult not to see how everyone is affected by the ups and downs of our recent economy. Perhaps it is for this very reason that these same small business owners are ahead of the minimum wage curve, providing for their employees and giving themselves some breathing room in the process.