If you own a business, chances are it represents one of your most valuable assets. This is why a truly effective estate plan for you and your loved ones depends to a large extent on having an equally effective business plan. What constitutes an effective business plan? For starters, it must take into account the possibility of extraordinary growth, while at the same time provide protection against downturns in the economy or changes to the business landscape. It must also shield personal and family assets from the potential losses associated with the business itself. Finally, your plan must protect your business from a wide range of issues and potential threats, including frivolous lawsuits; the inability of loved ones to access assets if you pass away suddenly or become incapacitated; the manner and timing of your exit from the business (especially if there are concerns about your children or their spouses); tax minimization; how to deal with partners, other owners and employees; and many more.
At the Victor Law Firm as Long Island business planning attorneys, we can design an effective business plan to help you at start-up, exit and every stage in between. We can work with your existing CPAs, executives, attorneys and other key advisors to develop a comprehensive, highly effective plan. We offer all of the following business planning services and more:
- Company formation
- Choice of business entity
- Structure of business entity
- Purchase or sale of a business
- General legal counsel to businesses and individual owners
- Non-profit Incorporation and 501(c)(3) Applications
- Incorporation and Dissolution under New York’s Religious Corporations Law
- Coordination of personal, estate and business plans
- Tax planning
- Reorganization and restructuring
- Mergers and acquisitions
- Shareholder control agreements
- Voting agreements
- Buy-sell agreements
- Shareholder and partner disputes
- Sales and disposition of businesses
- Succession planning
Your choice of business entity is a critical decision for a number of reasons, particularly with regard to minimizing taxes and how profits can be distributed. We have extensive experience in helping prospective business owners select and set up the entity that best fits their current situation and goals for the future. What is the ideal entity for you? Here is a brief introduction:
A Sole Proprietorship is operated by a self-employed person who has not formally organized the business.
Partnerships can be formal or informal agreements between individuals who agree to work together and share profits and losses. There are general partnerships, wherein all parties share profits, losses and liability. There are also limited partnerships, wherein one or more of the partners contributes capital, shares in profit or loss, but is not actively involved in running the business.
A Corporation is the most common form of business organization and confers many important legal rights upon its owners, including limited liability, the ability to issue shares of easily transferable stock and greater flexibility in managing ownership structure. Through incorporation, owners enjoy separate legal standing from the company and are protected against personal liability if the company is sued.
Limited Liability Company
A Limited Liability Company combines the flexibility of Partnership with the protection of limited liability for its owners, such as that inherent in a Corporation. Another benefit of an LLC is that it is much simpler to create and register than a Corporation.
Given the importance of choosing the right entity, and having it set up and maintained correctly, you should not rely on the advice of general practitioners but rather consult with an experienced business law firm such as the Victor Law Firm.
Business Exit Planning
Your exit strategy can be every bit as important as your choice of entity and overall business plan in determining how much money you ultimately earn from your business. Our goal in this area is to give you complete control over how your business is managed while you are still in charge, as well as when you decide to sell or pass it on to members of your family.
We can use a wide range of legal tools to ensure you pay the least amount in taxes and receive the greatest possible return on your initial investment. We can also show you how to avoid the infighting and other pitfalls that often accompany family partnerships and other close corporations. This is particularly important for blended families, as well as families in which more than one person desires to run the business. The fact is, according to the Small Business Administration and researchers at Baylor University’s Institute for Family Business, only 30% of family businesses survive from one generation to the next, and even fewer to a third generation. The most commonly given reason for this is the lack of a plan for an orderly succession. We can help you avoid this unfortunate scenario, by addressing all of the following questions and more:
- Do your children or grandchildren want to take over your business? It is never a good idea to insist your children take over the business. You know how much hard work and passion it took to make your business succeed. Imagine if you had not been passionate about it
- Is the interested family member qualified? Has that family member worked in the business or learned necessary skills at school or on the job?
- If you have more than one child, there are other possibilities to consider. For example, one or more of your children may want to go into the business, but it is also possible that some will not. Can you treat your children fairly if you leave the your business to one child? We can help you come up with strategies to ensure you treat your children fairly.
- If no family members want or are capable of running your business, should you hire management to run the business while retaining ownership, or does it make more sense to sell the business?
These are not decisions a business owner should make on his or her own. The best thing to do is to sit down with your family, as well as an experienced business planning attorney, and discuss the situation openly.