Business Continuation Planning

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What is business continuation planning?

Let’s explain this through a couple of scenarios:

Let’s say that a business owner passes on, and no business continuation plan has either been put in place or begun. The Internal Revenue Service has guidelines established for the specific way that a business must be valued for estate tax purposes. Trust me, this isn’t terribly reasonable. For our example, let’s say that the entire estate is worth $5,000,000. This number is broken up as follows: $1,500,000 for the business, $500,000 in cash and securities, $200,000 in personal property and $2,800,000 in real estate. If the estate tax credit at the date of death is $2,000,000, then the estate would pay tax on $3,000,000 or roughly $1,650,000 in tax. If the business had been transferred to the next generation prior to the death, then the value of the estate would only be $3,500,000 and the tax would only be roughly $825,000. If in addition to the business being transferred, the real estate had been put into a trust, then there would be no estate taxes due at all.

Do not try to face this on your own. Chris@AccountingSolutionsltd.com Additional Accounting Articles and information on my firm can be found at www.AccountingSolutionsLtd.com