Category: Key People_Or Group

Case Study: Rapid Sales Growth and Ownership

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, Funding your Buy and Sell, Key People_Or Group, Strategies of growing business, Valuation, Working On Your Business

Case Example Using Term Insurance

By Thomas J. Perrone, CLU, CIC

This was a situation where the company needed protection but wasn’t ready to purchase permanent insurance, even though the situation called for it.  However, the term insurance gave them what they wanted at the time and gave them the needed protection. 

Scenario: 

 A thriving business, comprising three partners—a relationship builder, an idea generator, and a product engineer—experienced remarkable sales growth within a few years. However, a potential challenge arose regarding ownership transfer upon a partner’s death, as all partners shared familial ties. 


To mitigate this concern, a comprehensive stock redemption program was devised and funded through a term insurance policy with a premium exceeding $60,000. This strategic approach enabled the business to navigate ownership transfer complexities and ensure the continuity of its operations.

Through the years, parts of the term insurance has been converted, and the company is paying about $125,000 in insurance premium to fund their liabilities and commitment.  

The case was developed through a relationship i had with one of the owners, through an introduction.  

Lesson:  

Even though this was a start up and a young company, if I has assumed it did not have the cash flow, I would have lost out on all the great potential.  Don’t assume anything, but let your client tell you what they want and why. 

THE WHY: 

There was a past history of the one of the current partners where their family member was part of a company where the partner died.  No planning was done, so the deceased partners family became the new partners.  This was not pretty, and the business ended up in chaos.  Obviously, a motivating factor for the current owner to have a good Buy and Sell Agreement where it was funded 

If you are an advisor who is working with business owners or wants to develop a business market segment in your practice, we should talk. We offer great opportunities working with our organization and deep backup.  

Thomas J. Perrone, CLU, CIC

tperrone@necgginc.com

WHY A BUY AND SELL AGREEMENT FOR AN S CORPORATION IS NECESSARY! 

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, evaluations, Key People_Or Group, Selling Your Business

By Thomas J. Perrone, CLU, CIC 

A Buy and Sell Agreement for an S Corporation needs special designs.  

Key Point on Redemption of S Corporation 

  • Special tax needs 
  • Financial security 
  • Triggers that transfer the S corporation 
  • Conflicts 

Also, a proper buy and sell agreement can do the following:  

  • Avoid a fire sale 
  • Create stability for employees and creditor/vendors 
  • Avoid termination of the S corporation status 
  • Avoid costly litigation 
  • Create a market 

This video explains why a proper BSA is needed. It covers many areas when the company has selected S corporation status.  

Summary 

A properly designed buy and sell agreement (BSA) is essential for S Corporations due to unique tax concerns. It is important for financial security. Triggering events can transfer ownership and cause potential conflicts. Such an agreement helps prevent fire sales. It ensures stability for employees and creditors. It also protects S Corporation status. Additionally, it avoids costly legal disputes and creates a market for shares. The document highlights the importance of addressing these areas to keep smooth business operations. 

Buy and Sell Agreement Tutorial

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, evaluations, Funding your Buy and Sell, Income from your business, Key People_Or Group, Passive Ownership, retirement, Selling Your Business, Valuation, Value drivers

By: Thomas J. Perrone, CLU,CIC

and Sell arrangements that have emerged since the Connelly case.

The tutorial delves into the rationale behind the utilization of these arrangements and elucidates their advantages.

Furthermore, a comparative analysis of the funding costs associated with different Buy and Sell Agreement structures is presented.

FREE BOOK “UNLOCKING YOUR BUSINESS DNA” FREE DOWNLOAD

https://www.allclients.com/Form3.aspx?Key=4F3D16E276A4EC0C73BFDC182AA06C23

Strategies for Making Your Taxable Retirement Plan – Tax-Free

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, Estate Planning, Executive Benefits, Key People_Or Group, retirement, Tax Efficient, Tax Free Income

By Thomas J. Perrone, CLU, CIC 

Retirement plans such as 401(k), IRA, 403(b), Cash Balance, Profit Sharing, and other qualified plans are popular choices for securing one’s future. While these plans focus on accumulation and stock market returns, which can be quite exciting, there are significant drawbacks associated with them.

Although retirement plans offer the appeal of disciplined savings and the potential for growth over time, they also come with inherent risks that are often overlooked. These plans, designed to assist participants, can sometimes result in financial shortfalls or unforeseen tax liabilities. The unpredictability of market performance and regulatory constraints may cause participants to question the adequacy and reliability of such strategies. Addressing these concerns proactively is essential for ensuring a smoother retirement journey and providing stronger security for loved ones.

Life insurance can help mitigate these downsides. However, there are several critical discussions that are seldom addressed when dealing with qualified retirement plans:

  • Future taxation: 100% of the funds are taxed upon withdrawal.
  • Death, disability, or termination of the plan: These events can significantly affect the ultimate outcomes for the family. For instance, if the participant dies five years into the plan, the family may not receive the anticipated benefits.
  • Sufficiency: Will the plan provide 60-75% of your final earnings?
  • Contribution limits: Participants may struggle to contribute enough to create the principal needed to achieve the desired percentage, particularly highly compensated employees.

These issues can be addressed effectively by incorporating life insurance into the retirement strategy.

The accompanying video explores some of the most pressing questions regarding retirement plans.

Learn about the JFK ERA benefit plan used for high earners, a plan that will create tax-free benefits with very few restrictions. This is a plan every Business Owner should know about.

Get your FREE REPORT– CLICK THE LINK BELOW

https://www.allclients.com/Form3.aspx?Key=277641709EAD8CD47ED41034FB533AB4

Thomas J. Perrone, CLU, CIC

tperrone@necgginc.com

A Business Owner Committed to Exceptional Service and Effective Communication! 

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Company Wealth, evaluations, Key People_Or Group, Working On Your Business

By Thomas J. Perrone, CLU, CIC

Romeo Belisle is committed to exceptional service and communication, defying the trend of declining client service and employee mentorship. With a background in the Navy, Romeo values quality above all. He discusses his unique approach to training employees and maintaining constant communication with clients. Romeo’s mission is to ensure quality in all his businesses, enriching both end users and those around him.

Dan-Kar
192c New Boston st
Woburn, MA 01801 Map

Dan-Kar Website

(508) 916-8645 w

romeo@dan-Kar.com

Romeo Belisle of Dan-Kar Corporation in Woburn, MA, is a notable business owner. You can learn more about him on LinkedIn: linkedin.com/in/romeo-belisle-ba364416a

Romeo’s work focuses on helping and serving others, with a vision for business growth that aims to improve life for everyone. Read his LinkedIn profile and you’ll agree. Today, we’ll discuss business, growth, culture, and expansion.

https://podcasts.apple.com/us/podcast/building-and-protecting-your-business-worth/id1539791693?i=1000704913159

Free Ebook; “Building and Protecting Your Business Worth”. Over fifty years of business planning!

CLICK

New England Consulting Group of Guilford, Inc.

tperrone@necgginc.com

The Process Of Transition In The Mind Of A Business Owner!

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, evaluations, Income from your business, Inside Sale, Key People_Or Group, Passive Ownership

Thomas J. Perrone, CLU, CIC

It’s not easy thinking about the transition of your business! Ask any business owner who has built their business, treated it like a family member, and put all that they had in their “life’s effort”.

It’s a great story with great lessons.

https://podcasts.apple.com/us/podcast/building-and-protecting-your-business-worth/id1539791693?i=1000690360724

Overcoming Workplace Burnout with the 3.3 Rule

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Executive Benefits, Key People_Or Group, Team, Uncategorized, Value drivers, Working On Your Business

Thomas J. Perrone, CLU, CIC

Feeling stress or burnout in your career?  Feel like you have no life because you feel you must be working in your career? Feel you are missing time with your family. Starting to hate what you do?  

Tom and John discuss this fabulous and innovative book and how it can change the lives of many.   

Why do we work 40,50,60 hours of work a week?  Why do we feel guilty when we aren’t working. Why do we feel burnout often?   

These are some of the many questions John Briggs’ book covers in “The 3.3 Rule”.   

This book will give you the path you need to start enjoying more time away from work while starting to enjoy your work again.  It gives you permission to change the rules for yourself, your family and your employer.  

Throughout the book John proves that the idea of working till you drop does not make any sense for the modern worker. 

  CLICK TO LISTEN

**John Briggs, CPA 

38 W 13775 S suite 310 

Draper, UT 84020 

Phone: (801) 999-8295 

Email: adminteam@incitetax.com 

Located in Draper, UT 

Take the Planning Tools Out of the Shed- You’ll Need Them!  

Featured by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, evaluations, Executive Benefits, Funding your Buy and Sell, Income from your business, Inside Sale, Key People_Or Group, Life Insurance Types, Passive Ownership, retirement, Selling Your Business

Thomas J. Perrone, CLU, CIC

After the 2017 Jobs Act, many of us (estate and business planners), had to shift our planning topics to moderate estate, Medicaid and income tax planning.  

Many of the tools we used prior to the 2017Jobs Act were often used in the planning process, simply because more business owners were affected and exposed to the Federal and State Estate Tax System. Consequently, more sophisticated strategies were needed to shift value, freeze value, or shelter value from the estate.  

Once the Jobs Act came into play, the exemption amounts eliminated many small business owners from the problem of estate taxation.  

However, with part of the Jobs Act heading for Sunset, we may see more businesses becoming exposed to Federal and State estate taxation.  

Time to go to the shed if you want to play in this market.  

This video will help guide you to some of the areas of planning you will have to dust off and rekindle for use.  

Download your Free Business Guide which will help explain many of the topics discussed. Immediate download, CLICK HERE! 

Thomas J. Perrone, CLU, CIC

tperrone@necgginc.com

The Right Life Insurance Policy for Your Client? 

Featured by YOUR BUSINESS WORTH, posted in Buy and Sell Agreements, Company Wealth, Estate Planning, Executive Benefits, Funding your Buy and Sell, Income from your business, Inside Sale, Key People_Or Group, Passive Ownership, retirement

By Thomas J. Perrone, CLU, CIC

Before the advisors can give you their opinion, they need to know whether the problem is permanent or temporary.  See, buying term insurance when the problem is permanent is like wetting the bed, eventually you will have to get up and change the sheets.   

Not only does the insurance broker have to ask tough questions about the coverage, but also the other advisors that are part of the team.   

Too often, advisors knee jerk to one type of plan because of the lack of information they have, or their misconceptions of coverage.  In many cases, the knee jerk suggestion is the wrong one.   

This video covers some important points of what is needed to make the right decision about the coverage.   

Questions such as:  

  • How long will the problem exist 
  • Age of the insured 
  • Is the problem permanent like tax liability or does it have a predictable ending date 
  • Actual cost when comparing the value of cask value 
  • Renewal rates in the future 
  • conversions of coverage – is the coverage convertible 
  • cash flow predictable 
  • Is the problem a reoccurring one 

ENJOY your FREE Business And Estate COMPREHENSIVE GUIDE – CLICK TO DOWNLOAD

https://www.allclients.com/Form2.aspx?Key=76EB00B717E35DC55BDE502F30D6ACD6

THREE WAYS TO GROW YOUR BUSINESS WEALTH! 

by YOUR BUSINESS WORTH, posted in Business Growth and Transition, Buy and Sell Agreements, Company Wealth, Estate Planning, evaluations, Executive Benefits, Funding your Buy and Sell, Income from your business, Inside Sale, Key People_Or Group, Passive Ownership, retirement, Selling Your Business, Strategies of growing business, Tax Efficient, Tax Free Income, Uncategorized

Thomas J. Perrone, CLU, CIC – NEW ENGLAND CONSULTING GROUP OF GUILFORD, INC

Growing value in your business can create tremendous wealth, however, only 15-30% of the small businesses will sell, which creates the “if factor”, the unknown.  

The percentage of sales is lower for the smaller owned business, more like 15%.  

Building your business to its highest potential value is possible by having guidelines of what must be done as you grow the business.  

To hedge the “what if’s” of selling it, you can use the cash flow of the business to create other assets such as executive compensation and qualified benefits and plans.   

Many owners neglect to consider these options and end up with too much wealth in their business, causing liquidity and tax problems when they leave, die or become disabled. This presents the problem of “how do you get your wealth out of your business on a tax advantaged method” when you want to leave the business and you need it?  

Building Your Business to Sell in The Future! 

Here is a list of strategies that will help in growing a robust business and greatest potential value.  

  • Develop value drivers  
  • Create a culture- employees come to you because of it 
  • Develop a middle management 
  • Systematize your business 
  • Customer diversification  
  • Avoid being dependent on a few customers for your sales  
  • Marketing plan- and always update it and analyze it 
  • Focus on growth of revenue, lowing of costs 
  • Protect yourself from litig 
  • Make sure you protect yourself such as  
  • Fund your Buy & sell agreements, bank loans, audit your liability insurance, protective documents, etc. 
  • Have a strategy to sell or transition your business, such as growing the middle management, and key people to step in and run the company, or even buy it. This is a long-term process, but you must put things in order and work on strategies to get the greatest potential value from the business.  

When Considering Using Your Business Cash Flow to Develop Executive Compensation and Other Benefits,  

Such as:  

  • Executive Compensation plans, where the company contributes to the plan, and you as owner pay as little as 2% in taxes on the contribution.  
  • Salary Continuation and deferred compensation arrangements for you.  
  • Deposit into your company’s retirement plan (like 401k, profit sharing, 403b, etc.). However, if you are a “high earning business owner”, do not load up on 401k contributions and other contributory plans as the tax consequences are severe.  
  • Make sure your buy and sell agreements are funded and updated. Make sure they cover at least the seven major triggers (death, disability, voluntary and non-voluntary termination, divorce, bankruptcy, retirement).  
  • Have critical illness plans set up such as medical reimbursement plans, disability, and health coverage.  
  • Tie your major Key group to your company as they are the value of the company and contribute to the cash flow of your company, allowing you to implement these strategies.  
  • Create vested benefit schedules to keep them with you  
  • Have a company evaluation /appraisal periodically.  
  • Focus your attention on growing sales, as all things point to sales revenue. 

Executive Compensation Is a Fantastic Way to Extract the Value of Your Company on a Tax-favored Basis, And Not Tie It Up in Your Company, Having It Available to You When Needed. 

There are but a few thoughts concerning building wealth through your business while building your business.  

If you would like to receive my report on the “JFK ERA BENEFITS THAT CREATED SUBSTANTIAL WEALTH FOR BUSINESS OWNER”, CLICK THE link and it will download. This benefit was around in the 50’s, but only for the bigger companies, now it is available to the smallest of businesses, and may be one of the greatest business owner benefits available.  CLICK JFK