Business and Tax Planning

For many small business owners, the business accounts for a large portion of their net worth, so it’s important to plan how the business will be handled in the event of the owner’s death or disability.

Without proper estate planning, the business you’ve worked so hard to build could be in jeopardy. And without planning for tax consequences, individuals and business owners can stumble into paying substantially more in income tax or capital gains tax than their situation may have warranted. We provide multiple services in connection with business and tax planning.

Organization. We advise clients on issues related to business formation and tax elections. We ensure that the entity selected is best suited to match the asset protection and tax flexibility needs of the business owners. We handle all businesses, from the simplest startups to the most sophisticated relationships. We are experienced in multi-member partnership and LLC arrangements, including bifurcated voting rights and different classes of stock. We are also well-versed in securities issues, issues related to raising investor capital, private placement memorandums, and subscription agreements.

Ongoing Business Representation. We assist business owners with various ongoing business representation needs. We are experienced in corporate governance issues, and assist clients with corporate meetings and documenting corporate issues to ensure they are accurate. We handle asset purchases and stock purchases for both buyers and sellers and can assist in structuring transactions to be sure they are the most advantageous for all parties. We provide services in connection with employment issues, including benefits plans. We also provide advice in connection with Non‑Compete Agreements and Non‑Disclosure Agreements.

Succession Planning. Creating a succession or continuity plan is where the lines blur between estate planning and succession planning. Your estate planning documents, such as your will or trust, specify who is entitled to your estate upon your death or who should run your business if you are disabled. Succession planning specifies how you, your family, and your business will prepare for a transition in ownership. The focus of succession planning is keeping a viable business running, or preparing the business for sale, in your absence.

Family-owned businesses can face particularly difficult estate planning issues. It’s not uncommon, for instance, for there to be a situation where one child of a business owner is interested in taking over the business and the other isn’t. We can help you address issues like these in your estate planning documents. For example, one solution is to grant all of the business assets over to one child and the remaining assets to the other. That way, you can still be fair but avoid future inter-sibling fights that could put your company at risk.

If your small business has multiple owners, then a buy-sell agreement is an essential part of your estate plan. Buy-sell agreements specify who can buy an owner’s share of a business, under what conditions, and at what price. A buy-sell agreement keeps a business in the hands of existing owners when one owner dies, becomes disabled, retires, or otherwise exits the business. Usually, the agreement grants existing owners first rights to buy the exiting owner’s share of the business according to a pre-set valuation formula. Those owners will buy out the exiting owner’s share either by directly paying the owner (if still alive) or the owner’s heirs. Buy-sell agreements can be structured in multiple ways, and we can use our experience and expertise to tailor yours to your particular situation.

We advise clients regarding whether life insurance is appropriate for their business. Life insurance coverage provides your family or named beneficiary with a source of income when you die. In addition, life insurance can guarantee an income stream to the business to keep your company operating in your absence. Disability insurance provides similar coverage if you experience a short-term or long-term disability.

Tax Planning. A big part of estate planning is tax planning. Tax laws are constantly in flux, and can be a trap for the unwary. We assist individuals and business owners in structuring their taxable transactions and businesses to minimize estate and gift taxes to the greatest extent possible. We are experienced and knowledgeable in trust planning and the appropriate use of family limited partnerships.

The sale of capital assets can lead to short or long term capital gains for business and investment property. Capital gains tax can be deferred if the taxpayer properly complies with Section 1031 of the Internal Revenue Code (commonly known as a 1031 exchange). We provide advice in connection with 1031 exchanges and can structure your capital transactions to defer taxes to the greatest extent possible.