Business Planning

Efficiently Transferring Ownership of a Family Business in Texas

Published on: August 15, 2024 | By Thomas W. McCulloch

If you are a business owner and want to transfer your ownership to a family member or external party, there are several options available to you. The best option, as always, will depend on your own circumstances and goals. On today’s blog, however, we review the basics of the most common options that business owners use when transferring ownership of their business. The most fundamental tip we offer to those considering transferring ownership of a business is to start looking into options early. Because the process requires so much care and attention, it’s never too soon to start thinking through the various possibilities.

Option 1: Gift the Business to a Family Member

If you have a daughter, son, or grandchild that you want to take over your family business, the first option is to transfer the business as a gift. In the United States, the gift tax exemption gives business owners the opportunity to transfer their company, in part or in whole, without charging any money. This federal exemption changes every year, so be sure to ask a wealth planning professional or estate planning attorney about this year’s annual limit.

Option 2: Sell the Business

You can, of course, sell your business in part or in full. By selling only part of the business, you can retain some ownership (and therefore some control) over the business while you take the time to pass down your institutional knowledge to the next generation. You could choose to do an internal sale, selling to a family member, or an external sale. Either way, it is important to think through your options early and do your due diligence so your business can carry on successfully.

Business Owner Estate Planning Strategies in Texas

Published on: July 13, 2024 | By David W. Miller

woman retirement risks and estate planning

When it comes to estate planning, business owners have a special set of needs to consider. Today, we cover some factors you might need to think through if you are a business owner drafting your estate plan. Of course, the specifics depend on the kind, size, and nature of your business, and if you have questions about how these factors apply to you, contact a Houston estate planning attorney you can trust.

What happens without an estate plan?

Unfortunately, without an estate plan in place, business owners can leave things in shambles when they pass. In some cases, the probate court can could freeze a decedent’s business account if there is no valid estate plan. An attorney will then have to petition the court for an emergency order to get permission to both handle the business’s affairs and decide how to deal with the business’s assets. The attorney, along with the decedent’s heirs, will be left to figure out how to figure everything out in a pinch. This can be stressful for beneficiaries and detrimental to the business at hand.

What factors should a business owner consider when drafting an estate plan?

Some questions related to your estate plan that you might want to consider if you are a business owner include:

What happens if you are sued?
How can you protect your business from liquidation or seizure?
What is your business worth now? What might it be worth in 10 years?
How will your heirs have liquidity to pay estate taxes on an estate if most of the value of the estate is tied up in a family business?
What should you do if you are selling the business and anticipating a large tax bill?

Who is Going to Take Over Your Business When You’re Gone?

Published on: June 20, 2024 | By Thomas W. McCulloch

If you are a business owner, there is no doubt you have thought about what might happen to your business once you are gone. At McCulloch & Miller, we specialize in planning for the future, and business succession is no different.

Today’s blog covers some basics that could help you think through your business’s long-term ownership, but at the end of the day, the most important takeaway is to plan early and plan often. By ensuring you have put your company’s plan in writing, you can take care of the business that you have worked so hard to build. As always, we recommend contacting a Houston estate planning attorney to talk through the specifics of your plan and make sure it covers all of the necessary and relevant details.

Option One: Internal Sale

One popular option among those who own family business or have children and grandchildren is to hand over the business to a relative. This hand off could be in the form of a sale or a gift. In this scenario, it’s important to talk to an expert about how to minimize the possible tax consequences that you and your loved one could suffer. It’s also important to have open and frequent conversations with the family member you plan on naming as the recipient of the business. If that family member is not open to the transfer, the long-term success of your business will be threatened.

Business Succession Planning Basics

Published on: June 7, 2024 | By David W. Miller

As many business owners know, business succession planning is a process, not a one-time ordeal. Succession planning is the activity through which organizations identify, train, and set up future leaders to take over when current management steps down. All companies should have some form of succession planning in place, but the methods and intensity of the planning can vary from company to company. Today, we cover some basics of succession planning that all business owners and leadership teams should keep in mind.

Recruitment

The first basic of business succession planning is recruiting capable, hardworking leaders. In recruiting, it’s important to think about widening your network to attract talented, diverse employees that have a desire to grow with the company. Your hiring decisions should reflect your company values, and you should work hard to retain the talent that you’ve acquired.

Training

The second facet of business succession planning is training. As an employee spends more time at a company, he or she develops institutional knowledge, and it’s key that employees pass this knowledge down to future leaders. It can also be helpful to cross-train, or to have employees learn the jobs of employees in other (sometimes seemingly unrelated) departments. As you train more leaders, it can be valuable to take a step back and observe who is taking the reins and who is implementing your business strategies at the highest level.

McCulloch & Miller, PLLC Among Top B2B Service Providers on UpCity!

Published on: September 13, 2021 | By McCulloch & Miller, PLLC

McCulloch & Miller, PLLC is thrilled to officially announce that we are a part of the UpCity community of top B2B service providers!

At McCulloch & Miller, we help guide small business owners and investors through planning strategies such as asset protection, tax consequences, and viable retirement planning. Every investor is different, and no one plan is the same. That’s why we make sure to assist our clients in knowing all of their options to better protect their values, goals, and legacy, in the way that they feel is best.

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UpCity is a resource that helps connect businesses to service providers they can trust. With more than 70,000 listed providers—from marketing agencies to accounting firms to HR consultants to IT specialists, and many more—1.5 million businesses (and counting) have visited UpCity to research and identify the best partner for their needs.

Who Can Benefit from a Houston Asset Protection Plan?

Published on: August 18, 2020 | By McCulloch & Miller, PLLC

It takes confidence and courage to start a business. In fact, many believe that the best business owners are those who are comfortable with some level of risk. However, there are acceptable risks and unacceptable risks, and any business owner knows that avoiding unnecessary risk is the cornerstone of running a successful business. Because of this, many business owners take the proactive step of creating a Houston asset protection plan.

What is an Asset Protection Plan?

An asset protection plan is a strategy that business owners can use to protect their assets in the event they get sued or end up going through a divorce. The reasons why a business owner decides to create an asset protection plan vary. For some, it is the fact that their business operates in a field that sees a significant amount of litigation. Examples include certain types of doctors, who may face a medical malpractice lawsuit. For others, it is the fear that they will be targeted for litigation based on their substantial assets. Whatever the reason, an asset protection plan can help preserve what a business owner has worked so hard to create.

Small Businesses Hurt by COVID-19 May Qualify for SBA Disaster Relief Loans

Published on: March 23, 2020 | By McCulloch & Miller, PLLC

The U.S. Small Business Administration (SBA) is offering up to $2 million in Economic Injury Disaster Loans for small businesses impacted by the coronavirus, in addition to a resource page detailing eligibility and how to apply.

It’s estimated that some 30 million US small businesses may fall victim to the coronavirus through closures, cancellations and other revenue losses. With no clear end in sight, the Small Business Administration (SBA) is offering eligible businesses low-interest disaster relief loans to cover operating expenses.

These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%. In order to keep payments affordable, they are offering long-term repayments, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

Employers Now May Help Employees with Tax-Free Direct Disaster Relief Assistance

Published on: March 16, 2020 | By McCulloch & Miller, PLLC

On March 13 President Trump declared a national emergency due to extraordinary circumstances resulting from Coronavirus. This Declaration opens up new methods for employers to provide tax-favored financial assistance to employees affected by the virus.

As the coronavirus pandemic emergency unfolds, it’s clear that increasing numbers of employees will likely suffer financial impacts … from quarantines, illnesses, workplace closings, etc. President Trump’s declaration of a national emergency on March 13, 2020 now allows employers to make direct disaster-relief payments to assist employees affected by the virus.

These types of payments are not treated as income/wages to the employees and are deductible to the employer as ordinary and necessary business expenses. There is no specific cap on the amount of assistance that may be provided to an employee other than it must be “reasonable and necessary” and must not be for an expense reimbursable by the employee’s insurance.