No matter the size of your business, you have to decide what to do with it upon your passing. It’s not uncommon for small business owners to believe they do not need a will; however, estate planning applies to anyone with assets to divide among family members, friends, or organizations. Here’s why estate planning is a must for any small business owner.

Determines Business Worth

Estate planning with an experienced lawyer determines the precise worth of your business. It provides the worth after the liquidation of inventory, equipment, and furniture, as well as any creditors who need payment. Knowing how much your business is worth as is and in a “liquid” form makes it easier to determine what to do with it upon your passing. If you decide to continue the business after reviewing its worth, the next step is to select a successor and write a correlating plan.

Avoids Complications Among Employees & Family Members

When a person of means, however great or small, passes without a will, family members and those associated with the business can get tied up in legal issues for years. Decisions regarding who inherits the business and any stocks, debts, or other monies associated with it fall under the court system. The courts adhere to estate planning laws that vary by state and consider factors such as whether the deceased individual was legally married and had children. In Missouri, for example, lands and bank accounts owned by the deceased person are among the assets subject to probate. Bank accounts featuring a payable on death or transfer on death clause are exempt.

Reduces Taxation

While estate planning laws in Missouri and elsewhere typically require family members to pay state and federal taxes on any personal property you own after your passing, it is possible to limit the taxation. The IRS outlines tax breaks for small business owners, allowing you to redeem your stock and defer taxes for up to five years. These actions ease the tax burden on those inheriting your property.

If you own a small business and need help with estate planning, the Law Offices of Drew F. Davis has been serving Clinton County, MO, for over 20 years. They have an extensive knowledge of tax laws, which they’ll use to ensure your small business is secure. Call (816) 632-7575 today to schedule a consultation, or visit the law firm online for a complete list of practice areas.