Posts Tagged ‘estate planning’
Got a Startup? Get a Business Valuation
Most people generally only think about having the value of their business appraised at the time of a potential sale or acquisition. As we have talked about in previous blogs, there are numerous situations in which a business owner must think about getting a business valuation, including when selling a business, for estate planning purposes, and when planning exit strategies. However, something that most people don’t realize is that startup businesses can benefit greatly from undergoing the process of a business valuation.
For a startup company, a valuation can be used as a business performance indicator, reflecting the company’s direction. It can help business owners figure out what’s working and what’s not, and where resources should directed or re-directed. A valuation can also give a deeper, more complete understanding about the competitive forces and drivers in the business’s market.
For any company, a business valuation can provide a snapshot of the business within the context of the market and industry in which it operates, in addition to evaluating the health of the market itself. This can help business owners at any level determine if the initial opportunity is still present and/or whether or not an exit from the business and the market is warranted.
It may be a wise decision for startup business owners to incorporate business valuations on a somewhat regular basis to determine if the company is achieving its desired trajectory.
By: Present Value
Business Valuations and Estate Planning
Estate planning is possibly the most neglected, but arguably the most important aspect of family-owned businesses.
Estate planning sets up the transfer of an individual’s property to designated beneficiaries to minimize or possibly eliminate the taxes levied by the U.S. Unified Gift and Estate Tax Program. Without estate planning, the tax liability of the business can be so oppressive that the only choice the inheritor has is to sell off all of the company’s assets and either soldier on without them, or shutter the business and walk away.
A periodic valuation of the business can help the owner and family members better understand the nature of the estate tax concerns. The valuation can also provide a guide the business owner can use to set up ownership transfers, and can provide a basis for the valuation of gifts. More importantly, it can guard against future conflicts with the IRS.
Business succession planning is just as important as estate planning to the future of a business. Making business succession plans (determining which family member or combination of family members will carry on the business) requires careful thought that will often cause the business owner to reconsider his original position on who will carry on the operations once he is gone or no longer able to maintain the leadership role.
By: Present Value
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