The widely embraced solution is the buy-sell agreement. With the cross purchase plan, the partners would take out life insurance policies on one another with payouts that are equal to the value of a share. After the death of a partner, the insurance proceeds would be used to purchase that partner’s share from their estate. There is another type of buy sell agreement called the entity purchase or stock redemption plan. The overall arrangement is the same, but the business as an entity would … [Read more...] about Is there an exit strategy for small business partners?
Small Business Planning
If you are exposed to the federal estate tax, assets can potentially be transferred among the partners had a tax discount. … [Read more...] about Do family limited partnerships offer any other benefits?
The answer to this question is no. When you establish a family limited partnership and you act as the general partner, you own nothing, but you control everything. Limited partners do not have any decision-making authority. The general partner is the sole controller, so there are no risks on that level. … [Read more...] about Aren’t you putting your property at risk since there are limited partners?
You can establish multiple different family limited partnerships. For example, let’s say that you own two apartment buildings. Each one of them could be held by a different family limited partnership. If someone is injured in one of the buildings, the other property would be protected. You can take this a step further and put personal property into a family limited partnerships. This can be useful for certain professionals that are vulnerable to legal actions. … [Read more...] about What if I own more than one business or investment property?
The family limited partnership (FLP) can be a good choice when certain circumstances exist. As the name would indicate, people in the partnership must be members of the same family. If you were to establish a family limited partnership, you would be the general partner. Family members that you bring into the fold would be limited partners. Anyone that initiates a lawsuit against a business that is held by a family limited partnership would be suing the FLP. Therefore, the personal property … [Read more...] about Can you explain one of the other asset protection structures?
Aside from the asset protection, another major benefit is the streamlined accounting. You would claim business profits and losses on your personal income tax returns. … [Read more...] about Do I file a separate business tax return if I have an LLC?
No, this would be a fraudulent conveyance, and the assets would not be protected. … [Read more...] about Can I make the LLC the owner of my property after I know I am going to be sued?
You would consult with an attorney to designate your business as a limited liability company. Going forward, generally speaking, your personal property would be protected if the business is sued by a creditor or another type of litigant seeking redress. There are some exceptions to this rule, but an LLC will provide protection against most types of legal actions. On the other side of the coin, if you are personally sued, the business would be protected. … [Read more...] about How does it work?
There are other possibilities, but the limited liability company (LLC) is a relatively simple, straightforward small business asset protection structure. … [Read more...] about What are my asset protection options?
The first thing to consider is the business structure that you will utilize. If you claim taxes as a sole proprietor, there would be no separation between your personal property and your business. Though it can seem counterintuitive to consider a succession strategy when you are just starting out, this is something you should also keep in mind. … [Read more...] about I am starting a small business. What legal matters should I be concerned about?