Business owners face a multitude of complex issues when it comes to ensuring the long-term success of their business. Profit and growth are the key objectives for any business, and with growth comes potential issues. Each business requires risk management planning in some or all of the following areas:
If an owner or partner dies, becomes critically ill or becomes permanently disabled, what will happen to your business? If no planning has been done, owners can suddenly find themselves in business with the spouse or executors of the deceased owner, or with a permanently disabled owner who can no longer contribute to the business. The survival of your business could be at stake. To properly manage this, the owners should enter into a buy-sell agreement to ensure their interests are protected.
Key person coverage
Disasters come in all forms. In the business world, the loss of a key employee can translate into corporate red ink. The most important element of a successful business is its most valuable people. The loss of a valuable employee could seriously affect the position and public perception of your business. Your sales could drop, your cash flow could slow and your company's position with creditors and banks could become strained. At the very least, a new person has to be recruited, trained and guided to replace the key employee. This takes time and money.
Capital gains tax
As a business owner, you have worked hard to build the value of your business. You may have started from scratch or with relatively little initial investment. Your efforts have led to a sizable increase in the market value of your business as your surplus has grown and debt has been reduced. At this point, the value of your business may have increased well beyond your initial involvement. This growth carries a hidden liability. If you die or sell your business, a capital gains tax is triggered.
Owners should cover their debts through life insurance and possibly critical illness. The most tax effective coverage is purchased through independent plans (not through the institution that provides the loan).
Our goal is to ensure the financial longevity of the business is not compromised, and that your family is taken care of.