FAMILY BUSINESS ADVICE
When you want family business advice, whether about organization or operations, start by deciding what kind of family business you have.
Is it a family business? Or is it a family business?
A family business is primarily a business. It is not important that it employ family members or that it remain as a legacy for future generations (or that they are or are not interested in running it.)
A family business is primarily a business to support and employ the family now and in decades to come.
Deciding which you have will make it easier to choose the right legal form and get the most beneficial tax treatment. It will let you choose operating provisions and employee benefit packages and transfer ownership and control in a way which better achieve your goals.
- How important is it to you to receive
- A salary?
- Salaries for other family members?
- Money during retirement?
- Money for your family when you die?
- How important is it for you or other family members to receive these fringe benefits paid for by the business and not taxable to the owner-employee?
- Life insurance (up to$50,000)
- Health and accident insurance
- Long-term care insurance
- Contributions to a health savings account
- If the business loses money (and most startups do), how important is it to you to be able to offset that loss against gains from other businesses or investments?
- If the business loses money (and at some point most do), how important is it to you to not be required to put in more money? How would you expect a loss to affect any other business which you or other members of your family might have?
- How important is it for you to control the business
- With your spouse?
- With other family members?
- With other current co-owners or key employees?
- What do you expect would happen were illness or disability to strike
- Your spouse?
- Another family member who works in the business?
- Another family member?
- Other current co-owners or key employees?
- What would happen if the company were sued by
- A customer?
- A vendor?
- Another current co-owner or key employee?
- A family member?
- What legal form of business could best protect the owners?
- What insurance could protect the owners?
- What insurance could protect the company?
- Does the business need errors and omissions insurance?
- Does the business need directors and officers insurance?
- Does the nature of the business mean that it needs a special license or a bond or specialized insurance?
- When might employment or voting, buy-sell or other arrangements in the operating agreement forestall, lessen or resolve business disagreements or other problems?
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