Business Succession Plan and Why it is Important

When a business is built and designed, business owners seek long-term continuity in it.  The business may be a new venture or an inherited one, but the driving force behind each business is the desire of the individual to enforce his identity and expand his horizons. Even when the business is at its pinnacle or the owners are nearing retirement, it is imperative that they contemplate on the legacy they would want to leave behind. It is also important that they consider the employees that are a part of their concern. And considering it as a mandatory part of running a business, and to safeguard negative setbacks that could be caused by their exit, business succession planning is a must for business owners.

corporate succession planning
Source: Patrick egan broker

Learn more about The Importance of  Succession Planning

What are the underlying concerns essential for succession planning?

There are certain crucial aspects which are considered while preparing a simple yet effective succession plan for the business. These aspects are:

  •  Continuance: The owner has to decide whether the business will be dissolved after his death/ retirement and the assets get liquidated or will the business continue and be passed on to an inheritor.
  •  Now, if it is decided that a business will continue, the next part of the succession plan involves choosing a successor.
  •  Selection of a Successor:  The successor may be a family member, a top-notch employee or any other person that will become the next owner. If it is already decided beforehand and included in the succession plan, the business is likely to sustain any setback.
succession planning for small business owners
Source: green county development
  •  Debt Repayments: While running a business, the company may have opted for some loans or credits. It is essential that a succession plan includes how the debts would be repaid when the time comes. It should also clearly include the assets which would be used for the loan repayments.
  •  Tax Management: It is also discretionary that while formulating the succession plan, strategies that may result in minimized taxation impacts when the ownership of the company is transferred, be considered.
company succession plan
Source: sagemark consulting

After contemplating these aspects, the succession plan should be properly documented and registered with a skilled attorney, for immediate effect after the exit of the owner.

How beneficial is a succession plan?

Succession plan ensures the uninterrupted transition of the business in case of the owner’s death or retirement. If the business is a partnership, then the share of the partners to be transferred in case of their death or retirement does not cause any hitch or legal complications.

family business succession planning
Source: blue vine

A well-formulated succession plan involves not only certain decisions taken by the owner but also includes the expertise of tax advisors, accountants, attorneys to decide the most optimal methods of transfer of ownership, tax management, ascertaining the value of the business and life insurance policies.

Succession plan for business owners is essential so that a business does not suffer any setback and keeps running smoothly even after the death of the owner. The development of a succession plan involves many features which should be worked upon with the help of skilled advisers. Do you need professional help? Contact our service professionals at Flagship Financial.

4 Tips for Combining Finances & Budgeting in Marriage

Financial Advice for the Newlywed Couple

Getting married is probably one of the most exciting, life-changing things you will do in life! But it does come with the realization that you will need to start handling your finances a bit differently. You’ll need to combine funds with your spouse to pay bills and figure out a savings plan together so you can have the cash for the things you really want to purchase. You’ll also want to create a budget together so you’re on the same page about what you can spend each month.

If you’re newly married or planning on tying the knot soon, here are some important tips for a healthy financial future together.

By Lydia Lois

1. Have A Joint Bank Account
Now, I know that this is not a unanimous thing that people do, and while I’ve heard some good arguments for why couples have separate accounts if you are asking me for my personal tips, advice, or what I do, I’m going to tell you to combine bank accounts.

I think that when you have separate bank accounts it is incredibly easy to view your account as “your money” and their account as “their money”. When you combine your accounts you are forced to view your money together rather than one or the other’s. When you view your money together it is easier to take ownership together, have goals together and work towards them together.

One main reason I hear for having separate accounts is that one person likes to spend money and so it’s easier for them to just have their own account so they don’t risk spending money needed for bills or other things. While I do think it is smart to take precaution when you know your significant other might like to spend, I think that doing this can sometimes be like giving them crutches for the problem instead of actually helping them get better.

Everyone when they get married has a certain amount of trouble moving towards “I can spend whenever I want” to “I have to talk to someone before spending money”. I know it was hard for my spending habits to change when I got married and I wasn’t even a crazy spender beforehand. But I think it’s important when you get married that it is part of what you combine and work on together. I think having your money in one account helps for you to both be involved and both be held accountable to your finances. Which brings me to my next point.

2. Make Sure You Both Know All Your Bills And Expenses
If you are in a marriage you are in a partnership. Things, for the most part, should be equal. Now I’m not saying that you should both make the same amount of money or that if someone makes more they have more control over the spending. On the contrary, no matter how much each person makes you should both be a part of knowing where your money goes. Sure maybe one person is the one that actually goes online and pays the bills, but you both should know what bills are being paid and how much. If you or your significant other is completely unaware of where your money is going they aren’t going to understand fully why something can’t be bought, or why the bank account is lower than usual. (And aside from that, they should help carry the burden that finances hold at times. If it is a particular hard month money wise they should carry that burden with you and not be left in the blissful dark.)

When both of you know exactly what your bills are, and exactly what your budgeted amounts are for spending, then you both know exactly where your money is going each month. Not only does this keep everything out in the open but it also creates ownership for both of you over your money. No one feels like the other is controlling the finances or in charge of how much they can spend, you both have agreed on these amounts and stick to them together. And if you haven’t agreed on these amounts yet, make sure and take my next tip.

3. Create A Budget Together & Have Goals For Your Money
The best part about being married is that you have a built in partner for everything! That shouldn’t stop with money! In order to get on the same page with your finances sit down together and decide where your money should go.

Start with your bills and absolute expenses, figuring out how much money you need for those necessary things. After that make the decisions together how much you want to spend on other categories. How much do you both want to spend on food every month? How much do you want to save? (Hint: Having a savings account is a must!) How much do you want to spend going out to the movies or any other entertainment? Making these decisions together will again hold you both accountable but also make you feel like you both have ownership over these decisions, as you should.

One of the most important things you can do for your money is to have goals with it. You’ve decided how much you need/want to spend on your bills and expenses, but after that decide what your goals are for the money left over. (Hint: You should have some!) What are you saving for? Are you trying to pay off debt? Are you trying to save for a down payment on a home? Maybe you have a vacation fund you want to put money into every month or a kid’s college fund?

Having goals for your money gives you both a “why” behind your budgeting and spending. If you are watching what you spend or cutting back on expenses without you both having a clear reason why, it’s going to be pretty hard to do. Why not buy this cute pair of shoes or new movie when the money we save from not buying it isn’t going anywhere? Having a clear goal and you both deciding that goal creates momentum for the the work it takes to get there!

4. Each Person Gets There Own Spending Amount
Finally the tip that allows a little more fun. I think most people use this tip already in some way, but I’m going to dive into it anyways. When you are figuring out your budget with your bills and expenses decide on an amount together that you both get to spend each month on whatever it is you please. (If of course, you have the money to do so.) Doing this allows you both some freedom in your spending and also allows you the ability to buy bigger things for yourself if you decide to save that money each month!

Now, I will say when deciding the amount don’t go overboard. Don’t decide a small amount for savings, a small amount for your couple goals and then the rest you divide in half for spending. (Especially if you are wanting to learn how to be a minimal spender like I teach here on the blog.) We tend to give ourselves more than we really need for unnecessary spending. I would say a rule of thumb would be to cut whatever the amount you are thinking off the top of your head in half.

When Greg and I had these amounts (we’ve since cut our spending back even more and don’t do this anymore and you can read about that here) we did $25 each. It was enough to give us a little freedom but also not too much that it cut into our budget and bigger money goals (owning our own home).

It may seem impossible at first but trust me it’s doable and you’ll still enjoy your life. Try a smaller amount first, you can always raise it if you really need/want more. But if you start out with a high amount, it’s harder to cut back later.

Read the full article here.

How You Should Invest If You’re A Millennial

Are you young and clueless about investing? Here are some tips to get started.

Many millennials know that investing is an important part of financial growth and security, but are just not sure where or how to start. The thought of investing your money, particularly when you’re very new to it, can be intimidating, especially when you probably don’t have thousands of dollars in savings to spare or risk losing.

It helps to have a very clear roadmap for investing your hard-earned cash, so you can feel confident in doing so and know that you’re making a good financial decision. Below you will find some good advice for investing as a millennial.

By Jessica Moorhouse

How I Would Suggest You Invest If You’re a Millennial
It’s simple — investing in Index Funds and Exchange-Traded Funds (ETFs) is the way to go if you’re a Millennial. GICs and mutual funds just don’t offer the returns they once did, and their fees are notoriously high. Going the self-directed route is also a good way to go, especially since there are so many ways to do this now, like through TD’s Direct Investing WebBroker™. Options like these help you cut down on costs, leaving you with more money in the end.

This is fairly common knowledge within the personal finance blogging community. That’s why I was so shocked to learn that many Millennials don’t consider self-directed investing an option because they don’t think they have enough money to do it, they don’t feel knowledgeable enough about it, or they just find it confusing.

Here’s the thing, it’s really not. Like I mentioned earlier, there are so many different platforms out there to make it simple for you. For example, TD noticed that there was a need to simplify self-directed investing, so they created the TD Direct Investing WebBroker™. They’ve integrated tools to help you navigate the platform intuitively, focused on making the user experience a priority, and basically just make it easier for investors like you to reach your financial goals without having to constantly worry about how your investments are doing.

And This Is What You Should Do Right After Reading this Post
The key takeaway from this post is that investing shouldn’t be complex or scary. And if someone, whether a friend, colleague or advisor tells you otherwise, ignore them or run away! Brush up on the ins and outs of Index Funds and ETFs (I highly suggest listening to my podcast episodes with Barry Choi and John Robertson for starters) and then choose a platform that will help you invest in these products.

And if you’re still not sure if right now is the right time to start investing… it is. Yes, because interest rates are low right now, you may not make that elusive 8-10% all the finance books talk about. But it’s important to remember that the sooner you start saving and investing for your future, the better off you’ll be.

And if you’re still not convinced, consider these investing ABC’s from Calvin MacInnis, S.V.P. of TD Direct Investing:

Act Now
No amount is too small when it comes to saving for your future. You just need to start, no matter how much money you can afford to contribute. The earlier you contribute, the bigger the impact those small sums will grow into down the road.

Brush Up On the Basics
You don’t have to be a math whiz to understand personal finance. It’s very basic stuff when you break it down. The important thing is to regularly brush up on the basics by reading books and blogs, watching educational videos, and listening to helpful podcasts to keep informed.

Choose Your Own Adventure
Never forget that you’re in control of your financial future. Don’t be afraid to try out self-directed investing because it seems confusing. It’s come a long way over the years and there are a number of platforms out there that are user-friendly, intuitive and include helpful resources to guide you through it.

Read the full article here.