Small Business Saturday which I spoke about on my recent radio show, is a reminder for us to appreciate and support the backbone of our economy—small businesses. At Sechler Law Firm, we understand the unique challenges entrepreneurs face, and we’re here to support them as they navigate these complexities.
The Role of Small Businesses in the Economy
Entrepreneurs take risks that drive innovation and economic growth. While many Americans work for small businesses, these enterprises contribute significantly to the GDP, making their success vital for our nation’s economic health.
Why Estate Planning Is Crucial for Small Business Owners
Estate planning for business owners involves more than just assets and wealth. It requires addressing unique considerations such as:
- Ownership of business-associated real estate.
- Succession planning for family involvement or potential sale.
- Access to liquidity during lean financial months.
The Unique Financial Landscape of Small Business Owners
Unlike many middle-class retirees who rely on home equity and retirement accounts, small business owners typically have their wealth tied up in their businesses. This dynamic shapes their financial decisions and estate planning needs.
Valuation and Tax Considerations for Small Business Estates
Accurate business valuation is essential for estate planning, especially for reducing taxable income through strategies like depreciation. Business owners should regularly review their plans to ensure these strategies are optimized.
Succession Planning: Preparing for the Future
With many baby boomer entrepreneurs approaching retirement, succession planning has become a critical focus. This process involves:
- Determining whether family members are interested in taking over the business.
- Exploring gifting or selling options.
- Considering health and long-term retirement goals.
Planning for Third-Party Sales
If no family member is available or interested in taking over, selling the business to a third party becomes necessary. This complex process often involves business brokers and extensive preparation.
Coordinating Internal and External Planning Documents
A comprehensive estate plan for business owners integrates both internal business documents (e.g., operating agreements, buy-sell agreements) and external documents (e.g., wills, trusts, powers of attorney). Ensuring alignment between these elements requires collaboration between estate planning and business attorneys.
Learn More About Estate Planning
Whether you’re a business owner or not, understanding the basics of estate planning is essential. Our Three Secrets to Protect Your Legacy Workshops offer valuable insights into tools like wills and trusts and how they fit into a broader estate plan.
Take the Next Step
If you’re a small business owner seeking guidance on succession planning or estate planning strategies, we invite you to connect with us. Register for a workshop at sechlerlawfirm.com/workshops or contact us directly to learn how we can help safeguard your legacy.
