We are proud to serve the fine citizens of Kentucky’s Capital! Frankfort, located along the Kentucky River between Louisville and Lexington, is at the heart of our great State’s bourbon, horse and wine country. As part of a Nationally Accredited Main Street Program, Downtown Frankfort has thrived in its efforts to stimulate economic development.
Downtown Frankfort is a business owner’s destination
Downtown Frankfort, Inc., a non-profit group of property and business owners who came together in 1989, was formed to address the needs of Frankfort’s downtown commercial district. The ground-breaking, four-point approach used in developing the area focuses on: design, organization, promotion, and economic restructuring. In this way, Frankfort can achieve revitalization and economic development while maintaining historic preservation.
Why Small Businesses Need an Estate Plan
Estate planning can protect assets from taxes, control how your asset will be distributed and much more. Everyone can benefit from a proper estate plan, no matter your wealth or status. This is also true for small business and family-owned business. Understanding why small businesses need an estate plan will help you in making decisions on how to organize and business and plan for succession of that business.
Starting a business is a huge achievement for most entrepreneurs, however maintaining that business can be an even bigger challenge. Whether your business is big or small, those challenges can include hiring the right people, building a successful brand and even choosing the right business entity. However, there are some issues that may be unique to small businesses. For small business owners in Reno, there is somewhere you can turn.
Basic types of pass-through business entities
A sole proprietorship is an unincorporated business, owned by a single individual, which reports its income on schedule C of the 1040 tax form. Similarly, a partnership is an unincorporated business with multiple owners, either individuals or other businesses.
Limited Liability Companies are businesses that have limited liability like a traditional C corporation. An S Corporation is a domestic corporation that can only be owned by U.S. citizens and can have up to 100 shareholders. It cannot be owned by other corporations or partnerships.
Estate tax consequences for sole proprietorships
If you are a sole proprietor, you know that your business assets are considered your assets, as the owner. Therefore, when you die, your business assets will be lumped together with your personal assets, even if those assets are in the name of your business. If you owned non-liquid assets, such as property, vehicles, machinery, the fair market value of these assets will be included with your personal assets for federal estate tax purposes.
Estate tax consequences for an S-Corporation
It is very common for small businesses and family-owned businesses to organize as an S-Corporation, because of the corporate creditor protections that are available. A S-Corporation must have less than 100 shareholders and only one class of stock. But, owning a share in an S-Corporation can have certain estate tax consequences that you may want to avoid. For instance, with a family-owned S-Corporation, if one sibling owning stock in the business dies, the value of those shares will be included in the deceased sibling’s taxable estate. Good estate planning can help to reduce the valuation of an S-Corporation, which will in turn reduce the decedent’s taxable estate.
The value of Family Limited Partnerships and LLCs
There are two types of business structures commonly used in estate planning, for the purpose of holding title to business/personal assets, in order to decrease the value of an owner’s taxable estate: Family Limited Partnerships (FLPs) and Limited Liability Companies (LLCs). These two business structures allow the general partners to maintain management and control over the business assets, while still allowing gifts of the value of the assets to their heirs. These structures are very beneficial to small businesses and families owning a substantial amount of real estate, but who want the land to stay in the family for generations.
There are other estate planning options for small businesses
These are just a few examples of business structures available. As each type of business has its own advantages and disadvantages, it is important to discuss your business plans with an estate planning attorney so you can find ways to maximize your assets throughout your lifetime and ensure they are properly distributed after your death.
If you have questions regarding small business planning, or any other estate planning matters, contact the experienced attorneys at the Gersh Law Offices, P.S.C. for a complimentary consultation either online or by calling us at (502) 423-7023.