Cultivating Strong Leadership

For a business to go from one generation to the next, it must nurture the next generation of leaders to take over the position of its current leaders. The new leaders must be as strong and knowledgeable as the current leaders, or the business could fail. Implementing mentorship initiatives and leadership development programs and preserving knowledge about the business all lead to a smooth transition.

Adaptability and Innovation

New technological advancements constantly affect the business landscape. A successful business must adapt to advancements and consumer preferences, or it could fail. Ensuring that future generations also embrace adaptability and innovation provides a better chance of future generations remaining successful.

Fostering a Strong Culture for Your Company

Your culture is the center of your business and a good part of its success. Your customers are loyal to you, in part because of your culture – you have the same beliefs they have. When you hire employees with the same values, they further that culture and share the same values as your customers, creating a bond between the employees, business, and customers.

Prioritizing this same culture through those who will eventually take over the business increases the chances of the company remaining successful through the generations.

Diversification

As years go by, new markets appear. New generations can diversify into new markets, whether new products and services or new geographic areas, mitigating the risk of failure in future generations. Adding new products and services ensures you remain relevant through the years, as you are spreading risk over multiple geographic regions and sectors.

Customer Relationships

Without customers, you don’t have a business. Just as you nurture future generations of leaders, customers nurture future buyers. You keep customers by listening to your customers’ feedback, building trust, and investing in personalized service. You can anticipate your customers’ needs.

A child sees his or her parents patronizing your business and will often continue patronizing that business when they become older—as long as the business continues to provide the excellent service the parents enjoyed.

Planning for Succession

Above anything else, you must plan for succession to preserve it for future generations. Some businesses plan for multiple generations, which can be done through trusts as long as the company stays in the family. A Florida estate planning attorney can help you create an estate plan to preserve your business for future generations.

Additional documents required to protect your business for future generations include financial and medical powers of attorney. Florida has several types of trusts that can protect your business.

For example, should you become incapacitated, can the right trust seamlessly transfer control of the business to your adult children or another trusted family member or friend to manage until you are no longer hindered? A trust can also protect your business against certain creditors, such as hospitals and nursing homes.

Create a Comprehensive Estate Plan to Protect Your Business

Anything can happen at any time. Protecting your business from excessive taxes, creditors, and lawsuits significantly minimizes the risk of failure and allows future generations to enjoy the same benefits of business ownership you have. Mrs. France handles estate planning, probate, federal income tax planning, and business formation.

With experience in all three areas, France Law can draft a comprehensive estate plan to help protect your business from creditors and excessive taxes and ensure a smooth transfer to the next generation.

Contact France Law today for an estate planning consultation for your business.

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Income Taxes

The main tax that people are most familiar with are income taxes. These are the taxes that are regularly taken out of the monthly paychecks of employees. But did you know that businesses have to pay income taxes too? In fact, all businesses, with the exception of partnerships, must file income tax returns. Partnerships, on the other hand, are required to file information returns. Federal income taxes are considered pay-as-you-go, which means that the company must pay taxes as they earn or receive income throughout the year.

Given that different types of businesses are required to pay federal income taxes differently, it’s important to know what kind of business you have. The most common types of business structures include sole proprietorship, partnership, corporation, and S-corporation.

Sole Proprietorship

If a business owner owns an unincorporated business by himself or herself, that company can be considered a sole proprietorship. However, it’s important to note that if the company elects to be treated as a limited liability company or as a corporation, they cannot also be a sole proprietor.

Partnership

A partnership is when two or more people form a relationship and join together to form a business. Each of these partners contributes money, property, labor, or skill and is expected to share in both the profits and losses of the business. If the business is officially a partnership, they will be expected to file an annual information return which will inform the government on their income, deductions, gains, losses, and other financial aspects of their business. Partnerships don’t pay income taxes, but instead each partner will include their share of the income or losses of the partnership on their individual tax return.

Corporation

A corporation, sometimes referred to as a C corporation, is made up of shareholders who exchange money, property, or both for the corporation’s capital stock, the stock a company is authorized by the corporate charter to use. To find out how much of their income is taxable, corporations can usually take the same deductions as a sole proprietorship, but they can also take some special deductions. A corporation will typically take the net income or losses from their day-to-day business to pay taxes and distribute any profits to their shareholders.

In certain circumstances, corporations have the ability to be taxed twice, known as double taxed. The corporation is taxed the first time when the money is initially earned. When the dividends are then distributed to the shareholders, they are taxed again. Adding to this is the fact that the corporation will not receive any tax deductions when the dividends are distributed to the shareholders and these shareholders are not allowed to deduct any losses of the corporation.

S Corporation

S corporations are corporations that have decided to pass on their corporate income, losses, deductions, and credits to their shareholders for federal tax purposes. These shareholders then report the flow-through of income and loss on their personal tax returns, meaning that they will be taxed at their individual income tax rate. This process allows the S corporations to avoid the double taxation that can be levied on the C corporations. However, there are some stipulations that must be met in order to be considered a S corporation; it must be a domestic corporation, must have only allowable shareholders, must have no more than 100 shareholders, must have only one class of stock, and must not be an ineligible corporation.

The way that your business is taxed is largely dependent on the type of business that you possess. Understanding how your business structure is classified will help you know what taxes you are liable for and what forms you must submit. To better understand your business’ income tax situation, come to France Law Firm for help.

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