This video will give you a good idea of the “One Big Beautiful Bill”, and the strategies that can be employed for the long-term planning
The Trump Administration made life much easier in preserving legacy for everyone.
If you wish to discuss any of this with me, please use my calendar link
Overview of the BBB and Planning Options and Strategies!
For Advisors and For Business Owners to Utilize.
Tom covers some of the major areas of the bill, emphasizing income tax reduction and estate exclusion and estate shifting. He urges estate owners to do planning now and avoid delaying because although the BBB is now law, it can be changed by congress in the future. Use it while you have it!
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.
Connelly was a hard case to digest as most of us who have been around the planning world for an exceptionally long time. We took the consequences of funding a stock redemption agreement as very normal. As normal as “cutting the end of the ham first.”
We are now forced to rethink this situation after the ruling, care must be taken when arranging the Buy and Sell Agreement and funding of a company, to avoid the results we have seen in Connelly.
Today I will bring you through a few options that advisors and business owners may consider when planning the transition of business interests.
CLICK HERE; YOUR REPORT WILL DOWNLOAD IMMEDIATELY!
Last month I posted a video on some of the general planning tools you have not used in the past eight years because of the Jobs Act. That is because of the high limits on the unified estate and gift tax amount. The high limits sheltered many estate owners and business owners from an estate tax. With the possible change around the corner it’s time to get ready.
This month I share how to use some of the tools discussed and why. Enjoy the video.
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 – 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
Since the exemption credit increased to a substantial amount a few years ago, the term “estate planning” took on a new meaning.
At one time estate planning was considered tax planning along with other aspects of planning of your estate, depending on whether you owned a business or not. Things like income for the family, debt payments, taxe reduction, income tax planning, and of course distribution of assets. There was always an emphasis on avoiding estate and state estate taxes.
However, as the exemption credit increased to the point that most American tax payers would be exempt, the emphasis change on how estate planning was done.
However, in 2025 the sunset provision will kick in and will redefine the estate planning landscape. The provision is set to go back to the exemption credit of about $600,000. However, most professionals feel it will be higher. Anyone’s guess.
With the possibility of lower exemption, estate planning will change. I personally feel small business owners will feel the impact more than most, as their business values will increase their potential exposure to Federal and State estate taxes.
Estate planning is an essential aspect of managing a small business. It can help ensure that your business is preserved as you want it to be, and that it can continue to operate smoothly even after you pass away. Part of estate planning for business owners will be to focus on the transition of the business more than before. If the exemption is lowered, small business owners will find themselves having to deal with a large tax at their death, upon the transfer of the business. Much can be avoided by doing planning now and using the exemptions available today.
Areas that need planning are:
Drafting a will and basic estate plan.
Planning for tax efficiencies.
Sorting out issues in family-owned businesses.
Drafting a buy-sell agreement (for multi-owner businesses).
Purchasing life and disability insurance.
Creating a succession plan.
Having a discussion with affected parties.
In order to have a proper discussion about estate planning the short video below will help you understand the main concept of asset distribution. If you are a small business owner, this information may be critical to your planning structure.
Request our FREE ESTATE PLANNING GUDIE FOR BUSINESS OWNERS:
For our FREE ESTATE PLANNING GUIDE FOR BUSINESS OWNERS, submit this short form AND the Estate planning guide will download immediately.
The Guide covers many of the areas you need to understand when doing your estate plan. It is also written in language you will understand.
A great business book has just come out. Its called “Unlocking Your Business Wealth”, written by Brian Kerrigan.
Brian is a specialist in business growth. He is extremely passionate about helping business owners build wealth in their business so they can become financially independent in the future and enjoy the lifestyle financial freedom brings.
Many business owners run their business with the focus on personal income, and the freedom of time. However, the business can also be a valuable financial asset worth much more than the salary being earned. Business wealth is an asset that can create financial independence for the business owner.
Many business owners also put too much wealth in their business and when they wish to use this equity find it difficult to get out, or extremely expensive to get out. In many cases, it can be lost due to the market and elements of the business environment.
In this book, Brian discusses the building of business wealth and the opportunities it creates. Each chapter is a steppingstone to create business wealth.
A great short read, and necessary if you are an entrepreneur.
Brian discusses parts of the book, how it will help you grow your business and help you to avoid the traps that you may experience in your business life.
To Contact Brian:
860) 303-8929 mobile
Email Brian: bkerrigan@taylorfoleylaw.com to schedule a complimentary consultation to discuss your results and lay the foundation for your future success. Remember, the first step is often the hardest, but it’s the only way to reach the top.
Enjoy our recent podcast with Brian about his wonderful book!
Many small business owners are focused on running a business that they neglect to plan for their retirement when they retire.
In many cases they put too much wealth in their business and have a hard time getting it out when they retire.
Too much wealth is tied in most business owners business. When the time comes that they need it, it becomes difficult to turn into a liquid asset quickly.
This report will help you understand the options that small business owners have and why they need to pay attention to the details of retirement.
Your Business Worth 