Allen Barron provides tax and estate planning for small business owners and S Corporations without employees as part of our integrated tax, legal, estate planning, accounting and business advisory services. Many small business owners mistakenly believe business succession planning and estate planning is for those with substantial wealth. This is simply a myth which does not reflect the nature of business ownership or home ownership. Business succession planning and estate planning protects all of the time, hard work, investment and creativity you’ve invested in your life and business. It reduces exposure to your business and personal assets and creates a systematic plan to preserve them if you are unexpectedly injured, become incapacitated or lose your life.
Estate planning for small business owners and S Corporations with no employees really boils down to 3 critical tasks:
- Protecting the viability of the business if and when something happens, and how ownership will be transferred upon your passing
- Ensuring that your assets are transferred in the shortest possible time frame, while reducing or eliminating taxable events and costs to the estate
- Saving you, your spouse and/or your beneficiaries a substantial amount of money
The first issue relates to the development of plan to ensure the smooth continuation of your business regardless of what happens to you. Do you have heirs or beneficiaries who are prepared to step in and actively manage the business? Will your business need interim management to preserve the viability of the business until beneficiaries come of age or the business can be successfully sold? You are the the center of your business entity, and a strong business succession plan ensures your company can continue in your absence while defining how and when the asset should be sold or transferred.
How will tax reform affect your tax position? What happens if you own your home? If you were to pass away without an estate plan your interest in the home may be tied up in probate for more than a year. Probate costs are based upon the market value or appraised value of your assets, not the equity. In the example of a residence in San Diego, if the house is appraised at $700,000 this is the amount probate fees would be based upon regardless of the underlying financing and remaining equity. The IRS usually looks at the company of a small business owner, single shareholder or sole proprietor as an asset of the owner. This means all of your assets, including your business (even those titled in the name of your company) could be lumped together and taxed as personal assets.
Allen Barron makes estate planning for small business owners and S Corporations with no employees a much easier task. We invite you to contact us or call 866-631-3470 for a free consultation to discuss your unique situation and all we can do to help you plan for the short and long term future.