Here at the Schomer Law Group, we take our commitment to our neighbors in Stanton to heart. Situated in western Orange County, Stanton is considered a part of the Los Angeles metropolitan area. With more than 38,000 residents, Stanton has experienced rapid growth in all areas of its three square miles. From commercial and industrial to the residential sectors of the city, Stanton continues to grow.
Serving Small Business Owners in Stanton
Owning and operating any type of business comes with certain risks, including exposure to legal and financial liabilities. However, not every business owners recognize ever risk, legal or financial, to which they are exposed. Every legally binding agreement that you enter into has specific consequences that should be considered carefully. With appropriate El Segundo small business planning, you can reduce and possibly eliminate financial and legal risks.
Sole Proprietors Need Business Planning
Sole proprietors need business estate planning, possibly more than other business entities. Sole proprietors need more protection because their personal assets are not actually separate from the business. That means, where you pass away, your business cannot continue unless you have a business estate plan in place. Unless you provide a specific plan of action in place, your expectations for business succession may not be realized.
Any Business Can be at Risk
All businesses involve risks and all business owners are exposed to legal or financial risks, as they operate their businesses. Starting a business, in itself, brings a certain amount of financial risk. The reality is, not all business owners recognize ever risk, legal or financial, to which they are exposed. Every legally binding agreement that you enter into has its consequences. With an appropriate business plan, you can reduce financial and legal risks.
Particular Challenges for Sole Proprietors
When the owner of a sole proprietorship dies, the business will cease to exist unless a successor takes over. Unlike corporations and partnerships, a sole proprietorship does not have a separate legal existence. Instead, the tax obligations and debts of a sole proprietorship are linked to the owner of the business. Either the business will dissolve or ownership must be transferred to someone else. If you want your business to continue, you have to create a business estate plan to make sure that happens.
Estate planning Issues Faced by Sole Proprietorships
One particular concern for sole proprietors is how to protect their family’s financial future. For that reason, most sole proprietors include terms in their estate plans that direct the sale of the business or that appoint a relative to take over business operations. There are often tax consequences when a sole proprietor passes away. Without the proper estate plan, business assets will pass on to the next generation with significant estate and inheritance tax consequences. This is why it is so important that the business assets of a sole proprietorship be included in your general estate plan.
Strategies for Protecting Your Business Assets
One important aspect of business planning, and particularly asset protection, is liability insurance. They type of insurance you will need to provide appropriate protection for your business assets depends on the status of your business. Your insurance needs will likely change as your business develops. Adding an umbrella policy to your standard liability insurance coverage is wise because it provides individual protection, as well as homeowner’s and auto insurance coverage. Another way to provide asset protection for business owners is to establish a pension plan.
When is it Time to Create a Business Plan?
Before there is any indication of financial or legal issues, you need to take affirmative steps to protect your business assets through a business estate plan. In additional to being a very prudent decision to make for your business, creditors have a more difficult time challenging any transactions or asset transfer you make. By completing your business plan early on, there are always more options available to head off any potential financial problems.
Understanding the Benefits of Pass-Through Business Entities
Pass-through businesses are the most common entity chosen for family-owned and closely-held businesses. Consequently, the number of pass-through business entities has increased substantially over the last 30 years. On the other hand, the number of traditional corporations has decreased. Now, pass-through businesses make up nearly 94% of all businesses, and they earn more than 64% of total business net income in the United States. Also, pass-through businesses employ more than half of the workforce in the private sector. Considering these statistics, it is easy to see some of the benefits of pass-through businesses.
If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.
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