The Four Big Estate Planning Mistakes Small Businesses Owners Must Avoid
Small businesses owners help to form the backbone of our economy. According to data from the Small Business Administration (SBA), small companies are responsible for nearly half of private sector employment nationwide. If you are a small business owner, it is crucial that you have a comprehensive, customized estate plan that protects your personal and professional interests. Here, our New Jersey & New York estate planning lawyer highlights the top four small business estate planning mistakes to avoid.
- Not Setting Up a Comprehensive Plan for Business Continuation
Are you a small business owner in New Jersey or New York who is heavily involved in the day-to-day operations of your company? If so, it is crucial that you have a plan in place for what will happen when you are no longer available. Too many small business owners overlook the necessity of a comprehensive continuation plan. Without such a plan, you risk major disruptions or potentially even the abrupt business cessation upon their incapacity or death. Develop a well-structured business continuity plan that is clear and comprehensive.
- Assuming Your Children are Going to Willing or Able to Run the Company
Many small business owners in New York and New Jersey presume their children will take over operations. However, their interests (and capabilities) may vary. Do not make assumptions about succession. A successful transition requires evaluating their willingness and ability to manage the business effectively. Regular family discussions and involvement in business activities can provide insights into your kid’s actual interest and suitability to take over the company.
- Failing to Craft a Business Succession Plan (With Funding)
Without a properly funded succession plan, businesses face potential financial hurdles that can impede a smooth transition. By crafting a plan with clear leadership roles, responsibilities, and funding mechanisms—from life insurance to buy-sell agreements—small business owners can ensure the company remains operational and financially viable. A business succession plan should always be customized to meet the unique needs of the company. A one-size-fits all approach to business succession is not good enough.
- Not Consulting With a Small Business Estate Planning Lawyer Until it is Too Late
Estate planning is notoriously complex—especially for small business owners. You do not have to figure out everything alone. An all-too-common mistake is delaying consultation with an estate planning lawyer. Waiting too long can lead to missed opportunities for strategic planning and tax benefits. Proactive guidance from an estate planning lawyer who has experience with small business owners can help you ensure that you and your company are in the best financial position.
We Provide Estate Planning Services to Small Business Owners in New Jersey and New York
At Poulos LoPiccolo PC, our New Jersey & New York estate planning attorneys have the skills and experience to advocate for small business owners. If you have any specific questions or concerns about small business estate planning, please do not hesitate to contact us for a confidential initial consultation. We work with clients in New Jersey and New York.
Source:
advocacy.sba.gov/2023/03/07/frequently-asked-questions-about-small-business-2023/#:~:text=Small%20businesses%20employ%2061.7%20million,net%20jobs%20created%20since%201995.
