Your Family Business
Family business planning is essential whether to keep the business intact for the present generation, or to help it grow and pass on to the next generation without disaster. A number of large publicly held corporations started out as family businesses that succeeded in allowing the entire family to have a piece of the pie without bringing on conflict that can ruin a business and hurt a family.
Questions like what type of legal structure to use come up at the outset. The distinction between "C" and "S" corporations as opposed to sole proprietorship or partnership, are complicated and should be given consideration well before the time when passing the reigns may be necessary. On an ongoing basis, it's going to make a big difference whether the Form 1120, 1120S, or Schedule C of the personal 1040 are the tax forms the business uses in reporting it's finances. Besides that, the choice of entity (corporation or non-corporate, partnership or sole proprietorship, etc.) will make a difference in terms of the owner being shielded from personal liability for acts of the business. So there are both tax consequences and liability shield consequences.
In a person's last days, however, more often than not the things that really matter finally are recognized as really mattering. The family relationship is finally seen as the important thing it always was. The last thing anyone wants is for disputes or uncertainties about how the business will continue on, to hurt the family. Different relatives may have different interests and capabilities. Somehow, the business owner usually wants all of them to have some benefit, not only of their own labors but of the business which has been cultivated and grown over the years.
This is where the legal and accounting advice is needed, not just the personal or family counseling! Some way or the other, through corporate redemption of stock of the owner who passes away, or through a buy-sell agreement in which the surviving shareholders have the right to buy the stock of the owner and founder once he or she is gone, the corporation will most likely want to buy life insurance on the owner so that the repurchase of his shares will be possible on his death, without bankrupting the corporation or it's remaining stockholders. Alternatively, the stockholders of a small corporation will want to have life insurance on the life of the founder if a buy-sell agreement (in which surviving shareholders buy the stock of the deceased) rather than a corporate repurchase of the stock of the deceased is planned.
It could take expensive hours to go over details. Dr. Fowler's Family Business Assessment Tool is a form that could save some of that time and therefore could save money. Just fill the form out and bring that in to the lawyer when trying to plan the future of the business in anticipation of passing on the reigns. From that point, forming the paperwork and getting the accountant would be easy. Besides assessment forms, attending night classes in continuing education may give you some directional ideas.
Eventually you'll need a business attorney. Otherwise, you may make the big mistake of letting the I.R.S. figure everything out for you, in which case you will be much less likely to have anything left to pass on to your survivors. Whether it's something like the initial choice of what business form to use (corporate or sole proprietorship, partnership or limited liability, etc.), or ongoing compliance issues all the way to things like IPO Initial Public Offerings to turn your business into another Microsoft or planning for passing on the reigns, the attorney can provide estate planning, tax and insurance planning in addition to the basic business services, all in conjunction with the accountant and other professionals who must come into the picture from time to time. So whether you have an import - export business, a restaurant, a chain of restaurants or a dry cleaning shop, there are implications you will not even know about unless you have the right advice and input all the time.