If you’re the proud owner of a business, such as a family ranch or farm, it’s smart to think about who will take it over when you’re gone. Do you want to transfer the business to your children? What should you do if they have no interest in running things after you pass away?
A business planning lawyer from Legacy Design Strategies can answer all your questions regarding business succession. Our attorneys can also advise you on everything you need to know before starting a business or selling one to a new owner.
First, you’ll need to register your business name and trademark any logos or slogans you plan to use.
You’ll also need to apply for a Federal Tax ID Number. You’ll use this number to open a business bank account, pay taxes, and hire employees.
Don’t forget about business permits and licenses. Depending on your industry, you may need to apply for local, state, and federal licenses.
If you plan to hire employees, you’ll need to classify them properly. Misclassifying employees as independent contractors is against the law, and if you’re caught, you could face huge penalties from the IRS.
You’ll need to buy property and liability insurance, too. Commercial property insurance protects you from loss caused by vandalism, theft, or natural disasters. Product liability insurance protects you if your products injure a customer.
A business planning lawyer from Legacy Design Strategies can also help business owners with the following:
If you’re ready to grow your business, proceed carefully. How you choose to grow plays a big role in your business’s future.
You can grow your business by:
You may also want to examine your ownership structure. For instance, if you operate as a partnership, you might consider becoming a limited liability company (LLC).
You’ll have to consider taxes whenever you make major changes to your business. A lawyer well versed in business law can help you understand the tax implications of growing your business.
Ready to move on from your business? If you plan to sell, think about who will buy your business.
Will you sell to a venture capital firm or a private equity group? Maybe you want to keep your business in the family. Each route has different benefits and drawbacks. A business planning lawyer can help you decide if you’re unsure which to choose.
If you own a farm or ranch, it’s critical to plan for the long-term health of your business. That’s especially true if you intend for your child or another family member to take over the farm when you die.
With a succession plan, you can spell out who inherits your farm or ranch after your passing. However, it’s important to think carefully before you name your heirs. If you have multiple children, how will you divide ownership of your business? Will you give the farm or ranch to one child only or split ownership evenly between all children?
It’s smart to ask your children about their plans for the future. You may want the farm to stay in the family, but what will happen to the property if your children leave the state for other careers? They may choose to sell it despite your wishes.
Regardless of what you decide, you’ll need to name heirs for your farm or ranch in your will. If you die without a will, the law calls that dying intestate. State laws determine who will inherit your business.
Intestacy laws vary widely in different states. For instance, if you live in Nebraska and only have one surviving heir, your business will pass to them.
Inheritance matters become more complex if you’re married with multiple children. If you pass away with no will in Nebraska, your spouse will inherit the first $100,000 in property. Your children inherit whatever is left over.
That doesn’t necessarily mean the court will divide your business in a way you’d agree with. If you want control over how much your children inherit, you can do that with a will.
A will isn’t your only option when it comes to outlining asset distribution. You may also want to consider setting up a trust for your business.
If you put your business assets into a revocable living trust, you keep ownership of those assets until you pass away. At that point, your beneficiaries inherit your assets. As with a will, you can distribute assets in a trust however you like.
You could also establish joint tenancy with the right of survivorship. Using this method, ownership of your business automatically passes to the other owner(s) when you die.
It’s tough to think about who will inherit your business, especially if you own a family ranch or farm. Your business is a labor of love, and if it’s been in the family for generations, it makes sense you don’t want that to end.
With a thorough estate plan, you can spell out your wishes for the future of your business and ensure each child inherits a fair share. Schedule a no-cost, no-obligation call with our team at Legacy Design Strategies to make your estate plan today and get the peace of mind you've been searching for.
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If you’re ready to make your estate plan, Legacy Design Strategies is here to help. We specialize in estate planning and have years of experience serving clients in Iowa, North Dakota, and Nebraska. If you’d like to make a will or need help choosing a trust, just give us a call.