In this constantly progressing business world, starting your own business can be quite an overwhelming process. Owners of startup businesses usually spend all their time investing their efforts and money in their work, trying to foster maximum growth and success.
However, what they fail to realize is that not taking enough time to plan ahead for any unexpected potential illness or injury can be harmful for the success of their business. Planning is essential for almost all business aspects, especially when it comes to estate. Following are some strategies for estate planning that all entrepreneurs should focus on to help their small businesses thrive:
Create a Legal Will
The significance of creating a legal will during your life is extremely essential and shouldn’t be overlooked at any cost. For small business owners, a legal will is one of the most basic and important document related to estate planning available that is absolutely a must to form it at the right time.
Not only does a legal will allow you to plan the distribution of your personal property and assets ahead of time but it also allows the testator (the individual who writes the will – in this case, you) to nominate an executor for your business. The business executor will be someone who will be responsible for continuing your business.
Create a Legal Will
The significance of creating a legal will during your life is extremely essential and shouldn’t be overlooked at any cost. For small business owners, a legal will is one of the most basic and important document related to estate planning available that is absolutely a must to form it at the right time.
Not only does a legal will allow you to plan the distribution of your personal property and assets ahead of time but it also allows the testator (the individual who writes the will – in this case, you) to nominate an executor for your business. The business executor will be someone who will be responsible for continuing your business.
Try to Minimize Your Taxes
When an owner of a business passes away, their estate taxes can build up and mark the end of their organization that they invested their countless money and hard-earned money in. Most entrepreneurs don’t even know that such issues exist. Sometimes estate taxes are 50% or even more of the entire value of a company. Typically, this huge amount needs to be paid within a short time period of 9 months after the demise of the owner.In order to pay such large amount of taxes, most businesses need to sell. Plan in advance and take measures to prevent such unfortunate events from happening. In order to protect your business from experiencing this kind of heavy blow, you can hold your personal business shares in a secure trust.Think of a Succession Plan
You never know what is going to happen tomorrow or even in the next moment. An accident can occur any time in this unpredictable world and it is always best to take preventive measures in advance so that your business can continue to thrive for a longer period of time. While most of us would rather not entertain such scenarios, a stitch in time does save nine. Therefore, outlining a basic succession plan is essential and a must.
The main objective of your plan should be for your business to continue as usual without any major interruptions in case of your passing or incapacitation. You need to create strategies for forwarding private data, appoint future decision makers and more.
Prepare a Power of Attorney
A power of attorney will allow you to give an individual (the agent) the authority to act on your behalf. If you create your own power of attorney, you will be called the principal. As a principal, you will be able to nominate an agent who will be responsible for managing creditor / vendor payments, payrolls, financial assets and more. Remember, if you fail to declare a power of attorney during your life, the court will appoint one in your absence and the decision might not necessarily be in the favor of your business.
Keep Important Records Organized
One of the most essential elements of estate planning for small business owners is keeping their key records well organized. This helps ensure that important data will be easily accessible and understandable by the person who you have appointed to look after your business after you are unable to do so. Important business records might include insurance policies, business-related as well as personal financial statements, etc.Consider Creating a Charitable Trust
If you are seeking to take on a philanthropic proceed towards the administration of your estate after your demise, you can create a charitable trust in advance to have your assets donated to organizations that work actively towards achieving a specific goal such as special education or an old age home.
While estate planning might seem like a daunting task as a small business owner, with the aforementioned tips you will be on your way to forming an actionable and solid plan. If you are still finding the process a little overwhelming, you can always hire a professional estate planning lawyer to receive some additional guidance and optimize your estate planning process!
