Posting by Joel C. Susco, CPA

That time of year has come and gone again.  The office parties, family get-togethers, and buying presents are over, and tax planning for the year has begun.  It just does not seem like there are enough hours in the day or days in the week to accomplish it all.  But, it is important to spend some time after this end-of-year madness to focus on areas that may have gotten away from us during the lion’s share of the year.  Especially for family-owned businesses, the need for tax planning includes both personal and company planning coupled with investment and estate planning, as well as some issues that you may not have even considered.  So say goodbye to the eggnog and let’s talk tax planning.

As a refresher, here are some items to add to the list when meeting with your advisor:

First, it is important to talk about the year the business just had.  Was there a profit; if so, how large?  Did anything happen during the year that would affect the value of the company?  How do the answers to these questions affect the need to review your estate plans for the current year?  There may be a need to assess the value of the company; what are the current laws and what strategic plans should be implemented to successfully avoid any estate planning pitfalls based upon the new company value?  You have worked too hard to build a successful company, so it is important that you maintain that value through solid, accurate estate planning.  Estate planning considerations are always a critical area of attention when meeting with your advisor.

Assess the family’s role in the business. Who is coming up in the ranks to take over the business?  Are the family members enjoying their current roles?  Who is following them?  Think about how you will educate the next generation.  Are they natural successors or will some need to be nurtured?  It is important for the younger family members to be exposed to all aspects of the business to learn how they all work together.  Are there some natural non-family business owner candidates?  Identify them early.  Succession planning is critical to the longevity of the business.  Identifying the future leaders will allow the business to continue in existence for many years to come.

Review the ownership structure. Are there owners within the company that want out?  Maybe they are interested in moving to a different part of the business.  Make sure you are maximizing everyone’s potential.  There is nothing worse than having the business get stuck in a holding pattern because owners are too afraid to act.

Assess the governance or advisory panel for the company. Know what the strategic goals of the company are and ask yourself; will this advisory board allow us to attain our goals?  Can it be stronger?  Will this governance board enable us to get to the next level?  If not, how do we change it?

Revisit the family value model.  Your company was based upon a premise of doing good work and being successful to allow you to pass some of the benefits on to others in the form of charitable giving.  Make sure that successive generations of your business know the importance of that value so that they, too, can continue the tradition.

Oh and, of course, leave a little time for tax planning as well.  Make sure you address the critical tax issues that may affect your company this year.  You may not be able to answer every question, but at least it will provide good food for thought.  So remember, the next tax planning meeting should not be all about taxes, but about many of the issues affecting your business and your family.