6 Troublemaking Clients Chiropractors and Lawyers Should Refuse to Take

Chiropractors and personal injury lawyers who have recently started their own practice are often tempted to accept just about anyone who has been in an auto accident, but “This can be a monumental mistake,” warns California attorney Shawn Steel.

Steel’s practice concentrates on personal injury law and strongly supports the chiropractic profession. He lectures at Palmer West Chiropractic, Life Chiropractic College West and Southern California University of Health Sciences.

“If there is one professional area where attorneys and chiropractors should be on the same page, it is in recognizing when to say, “Thanks for coming to see me, but I don’t think that my office will be able to help you.” He provided this list of red flags that must be recognized and immediately acted upon.

1. The Know-It-All

These people know more than the doctor and the lawyer combined. They constantly second guess the doctor and argue with their lawyer, consuming a tremendous amount of time and energy. 

It is usually better for your mental health to let that know-it-all patient go! This person brings nothing but aggravation to the lawyer’s office, often saying things like, “I had a friend who with the same facts as my case settled for eight times as much as you want me to take, so what’s wrong with you?”

2. The Grouch (a First Cousin of the Know-It-All)

The Grouch is easy to spot. Your staff members are the first ones to notice that you’ve got a Grouch in your office. Always listen to your staff as they will tell you the truth.

The Grouch complains about everything! They blame the staff for not setting their appointment as the best time, not giving them adequate advance notice, and make up stuff to gripe about. They take the joy out of practice for both doctors and lawyers.

They are miserable human beings. While it is best to unload this Grouch, you can try to rescue the situation by saying, “If you want to stay with us, you need to stop complaining.”

3. The Split Personality (a Cousin of the Grouch, a Real-Life Version of Dr. Jekyll and Mr. Hyde)

This person is miserable to your staff: insulting and yelling. However, they are as sweet as cotton candy to you. Give them one warning: “Yell at my staff one more time, and you are out of here! No one deserves to be spoken to that way.”

Doctors and lawyers need to understand there is a great liberation when you let that person go. Mentally, you are free from a burning, destructive sensation in your life.  Neither you nor your staff should have to experience this.

4. The Doctor/Lawyer Hopper

These people immediately trash the last lawyer/doctor who was handling their case. If it is just one attorney, or one doctor, that can happen. But if it is multiple doctors or lawyers? You must think, “This person will never be happy with me, no matter what I do. So why go through the effort, as I will no doubt get fired anyway.” Decline to accept them.

5. This Person Gives Me a Bad Feeling!

 If there is something inherently negative between you and this potential patient/client, do not accept them. You do not need a reason. It may not be rational, but trust your inner voice. “Trust the Force!”

6. Beware of the Wandering Thief

This person’s goal in life is to take advantage of anyone whose path they cross. They intend to cheat you before even walking through your door. They may have a legitimate accident case. They may be hurt. But their sole objective is a payout in their pockets and not yours!

After care is complete:

(A) The Wandering Thief fires the lawyer.

(B) Negotiates the case themselves with the insurance adjuster.

(C) Gets all the money, pays none of the treatment bills or attorney fees. Then they vanish.

The giveaway for the lawyer is that, after signing the retainer agreement, the client will pressure the lawyer to have the doctor order lots of medical testing, to generate high bills.

Once a settlement amount it negotiated – but not paid – they will be unhappy with the numbers, fire the lawyer and try to settle the case themselves.  Even if the attorney’s name is on the settlement check, they may forge the lawyer’s name, take the money and disappear.

A Business Prof Offers His Formula

Lyle Sussman, the former chairman and professor of management, College of Business, University of Louisville, offered this recommendation for anyone in business who needs to say “No.”

“Say no if there is a disconnect — differing expectations — between what the person thinks you will provide and what you know you can deliver.

“Every plastic surgeon can tell a story about a patient disappointed because the procedure did not produce the gorgeous effect they anticipated.”

Attorney at Law, Author of “You and the Law”

After attending Loyola University School of Law, H. Dennis Beaver joined California’s Kern County District Attorney’s Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, “You and the Law.” Through his column he offers readers in need of down-to-earth advice his help free of charge. “I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift.” 

Source: kiplinger.com

Do You Own a Business with a Parking Lot? Read This Now!

Long Beach, Calif., attorney John Coates is not someone you want to hear from if you own commercial property that has, for example, a parking lot open to the public.

There’s nothing wrong with Coates, in fact he is a nice guy and first-rate lawyer, but a letter from him announces bad news. “You have been sued in federal court – not by me, but by a law firm that specializes in violations of the Americans with Disabilities Act, and in your case, something incredibly minor.” My client received such a letter from Coates, who offers his services to property owners who have been sued for violations of the ADA and receives notifications through services that monitor court filings.

You are probably wondering, “So, what did your client do to get such a letter?” 

Now, tighten your seatbelt for wild ride, but first a little history, as Coates related:

“What the United States Congress and President George H.W. Bush accomplished on July 26, 1990, has cost innocent property owners millions of dollars in fines and attorney fees – paid to lawyers who file hundreds of thousands of suits – most of them petty, ridiculous, and do nothing to further the access goals of the ADA but make these lawyers multimillionaires in the process.

“Before signing it into law, Bush was cautioned that the ADA was vague, costly and would lead to an explosion of litigation. His reply? ‘The legislation was carefully crafted to provide clear guidance to the business community.’”

Coates points to a 2018 article in the University of Baltimore Journal of Land and Development, titled “ADA Regulatory Compliance: How the Americans with Disabilities Act Affects Small Businesses.” It finds that:

 “For all its noble purposes, the ADA is a license for lawyers to print money at the expense of small business owners.”

Got Slope?

Have you heard of the term parking lot slope? Until my client was sued, I had not either, but according to the National Association of Truck Stop Owners, an astonishing 95% of all ADA suits contain an issue regarding parking spaces.

“Handicapped accessible parking spaces and aisles must have no more than a 2.08% slope in any direction,” Coates says. “This means there can only be 1 inch of vertical change for every 50 inches of horizontal change, because you don’t want too steep of a slope, so that a person in a wheelchair rolls away too rapidly and is injured.

“However, this is (just about) impossible to assure, because natural settling of parking lots, small earthquakes, and just the weight of vehicles constantly impacts the slope.”

I’ll bet you are thinking, “How does something as invisible as the slope of a parking lot wind up getting the property owner sued for an ADA violation?

“These law firms hire people to wander all over cities with a slope meter,” Coates says, “looking for handicapped parking spaces that exceed the ADA limit. In every case I have seen, there were no reports of injuries due to a slope that was out of compliance.”

If Sued, What Should You Do?

One of the most unfair things about the ADA is that you can be sued without ever getting a notice that you are out of compliance and given a chance to remedy the situation beforehand.

Also, as the bulk of these suits are filed in federal court, the plaintiff is automatically entitled to attorney fees that run into the thousands of dollars. In fact, many small businesses have had to shut their doors because of technical, but harmless ADA claims brought by lawyers who judges routinely describe as unethical.

So, what should you do upon either being served with a lawsuit or notified that one has been filed against your business?

Coates outlines these important steps to take:

  1. Contact an experienced, Certified Access Specialist (CASp) inspector to find out if you are actually in violation. 
  2. If so, don’t waste your money fighting the lawsuit! These violations are what we call strict liability, which is like a speeding ticket. If you are 1 mph over the limit, you are guilty.
  3. Most likely you will receive letters from attorneys who represent defendants. Do not simply hire the first one who contacts you! Instead, ask, “What is this going to cost me?”

If the CASp inspector has told you the bad news, and the lawyer can’t give you a solid number or says, “I think we can defend this,” RUN! Speak with a different attorney, as there are far too many lawyers who want to milk their clients!  By fighting these cases you will spend far more than settling.

How Can I Minimize the Chances of Being Sued?

Coates recommends that all commercial property owners have a CASp inspection performed so they are aware of potential issues and can remedy them.

“But neglect of the property is also an invitation to being sued,” he notes, adding, “for example, nothing says sue me like not taking care of your handicapped signs. If you do not have all three signs or stickers, you are begging for someone to come in and look for more issues.”   

Attorney at Law, Author of “You and the Law”

After attending Loyola University School of Law, H. Dennis Beaver joined California’s Kern County District Attorney’s Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, “You and the Law.” Through his column he offers readers in need of down-to-earth advice his help free of charge. “I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift.” 

Source: kiplinger.com

Potential Tax Changes Pressure Business Owners to Make Big Decisions

Owning a business and navigating the twists and turns that come along with it is like following a map that is constantly rewriting itself. Depending on any number of factors, pathways that seemed clear are suddenly closed off while new routes regularly open — and sometimes, a fork in the road that appeared far away is unexpectedly near at hand.

Few entities can rewrite the map like the government can. Even the barest suggestion of a change to the tax code or new regulations can shake the market or jolt a business owner into making a decision that might greatly affect their organization.

We’re seeing that today with the introduction of the Biden administration’s new proposals investing on infrastructure and helping families with education, child care and paid family leave. Both are funded by tax increases that could have major impacts on business owners as they relate to income tax rates, capital gains tax rates and estate and gift tax exemptions. Such proposals, if they come to pass, will create another new tax environment for business owners to navigate.

So, for owners who have been mulling major decisions, such as selling their business, perhaps a fork in the road that appeared to be five years away is looming much closer. Here are just a handful of the decisions and items up for consideration:

Selling a business

Let’s imagine a business owner in their late 50s is planning on selling their company in three years. The question suddenly is, should they sell now at a lower capital gains rate, or in the future, when the business could be worth more, but potentially higher taxes could undercut the extra gains?

Using a broad example (and not counting other fees and taxes for simplicity’s sake), if the business sold for $10 million today and the business owner had to pay today’s 20% capital gains tax, they’d be left with  $8 million. If, however, they waited to sell for another three years, when the business is worth $12 million, they should expect to take home more from the sale, right? It depends on what happens to taxes between now and then.

 If the tax rate doubles to 40%, the owner would be left with $7.2 million. In fact, under this tax rate, the business would have to sell for about $13.5 million for the same $8 million payout. I realize in the example above I did not account for the additional 3.8% surtax on net investment income as part of the Affordable Care Act, and I took some liberty with rounding the highest rate, but you get the picture.

In this scenario, the owner must ask, “If I’m going to wait to sell, will my business grow 35% in the next few years?” Even if the business is thriving and growing year after year, it may be a risk to wait to sell. As the past year proved, circumstances can change quickly. With that context, the increased potential for a tax increase forces a business owner to confront these questions and decisions.

Transitioning the business

Instead of selling their company, many business owners plan on transitioning it to the next generation. Even with a different exit strategy, the potential for tax changes that could impact estate planning and common transfer techniques should prompt a fresh look at succession plans.

For instance, owners commonly gift stock in the business to heirs. With the proposal from the Biden administration aiming to dramatically lower the federal lifetime exemption amounts on estates (from $11.7 million per couple currently to a proposed $7 million per couple), it would make this type of planning tough. In addition, with the annual gift-tax exemption set at $15,000 for individuals or $30,000 for married couples, an owner likely won’t completely transfer their business this way.

Even for an owner who plans on transitioning their business to the next generation but is still young and successful, now is a good time to consider succession planning. It always is, of course, but particularly when the tax environment changes, the proper strategy can ensure wealth is protected in the years to come. This may include getting the jump on shifting ownership to long-term estate planning vehicles, such as trusts.

Restructuring the business

Business owners should ask, what is the best way to own a business right now? Or rather, what’s the best way to structure a business?

For C corps, not only do they pay federal, state and sometimes local taxes, but also tax on profits, a rate that could increase (from 21% currently to a possible 28%) under the proposed legislation. Distributions to shareholders also have potential to be taxed at a higher rate, should that rate increase via new legislation. An S corporation, meanwhile, allows profits and losses to be passed through to personal tax returns.

Structures such as LLCs and sole proprietorships also avoid C corps’ double taxation issue, but it’s important to remember that an individual’s income tax rate may be higher than the corporate rate, adding another factor that may influence how an owner organizes their business. Even if tax rates don’t change notably in the coming years, there still may be an advantage to changing a business structure.

Choosing a path

Business owners constantly face decisions that affect their company’s lifecycle and its fortunes, whether that is a sale or transition to a new generation. We all want to be masters of our own fates, but often it is our environment that drives decision-making.

Nevertheless, owners don’t want to be too hasty in making a decision that could have a significant impact on their future, even if it appears the tax environment may be changing. It is always best to meet with advisers, break down the available options and their pros and cons.

While the fork in the road can arrive quickly, pausing before going left or right is the best decision.

Partner and President, Waldron Private Wealth

Matt Helfrich is President of Waldron Private Wealth, a boutique wealth management firm located just outside Pittsburgh, Pa. He leads Waldron’s strategic vision, brand and value proposition and overall culture of the firm. Since 2002, Helfrich has served in a number of roles including: Chief Investment Strategist and Chief Investment Officer, where he was instrumental in creating and refining Waldron’s investment discipline.

Source: kiplinger.com

Financial Health Checklist for Small Business Owners

If you’re a small-business owner, you know that the daily decisions you make impact your bottom line. Are you exercising the same care for your finances that you apply to the services you offer your clients?

The following is a checklist you can use to evaluate your financial health as a small-business owner.

Are You Focusing on the Big Picture?

There are many pieces to a small-business owner’s total financial picture. Your financial plan, budget and investments are three critical components to keep in mind no matter how busy daily operations become.

1. Financial Planning

         Taxes can be one of the most significant expenses for business owners. In order to identify and follow the most appropriate tax-planning strategies, small-business owners need to be clear about both their business goals and personal financial goals.

Do you:

  • Maintain a prioritized list of business and personal financial goals and refer to it when you need to make new decisions?
  • Have a small-business structure that offers you the most appropriate legal protections and benefits?
  • Reduce or defer taxes and maximize available deductions and credits? This may include timing income and expenses, using charitable gifting and saving for retirement using accounts such as an  individual or solo 401(k), SEP IRA or defined benefit plan.

2. Budget Management

Eighty-two percent of all small businesses that fail cite cash flow problems as the primary reason. One way to identify such challenges before they become lethal is to manage your budget according to your business plan.

Do you:

  • Know how much revenue you must generate to break even and cover expenses before profits?
  • Monitor your income, expenses, inventory, credit and cash regularly, adjusting and rebalancing where required so you cover your fixed expenses and maintain funds in your cash reserve?
  • Use your budget, break-even point and cash flows over time to evaluate your business financing options and identify the ones that make most sense for you, when financing is required?

3. Investments

         Many small-business owners mistakenly invest all of their time and money into their business.

Do you:

  • Maintain a cash cushion for both your personal finances and business needs, so that if you run into a cash flow crisis you have something to access?
  • Save regularly and invest any cash inflows that exceed your current expenses and immediate lifestyle needs into an account outside of your business?
  • Diversify your non-business investments across companies outside of your industry, in different geographies offering services that vary from yours?

Beyond those three critical components of financial health, here are a couple of other factors that small-business owners need to have a firm grasp on.

First, Are You Protecting What You Have?

Many small-business owners wisely purchase insurance to protect their assets from risks unique to them.

Do you:

  • Understand the types of risks that you face in your small business?
  • Own insurance and regularly review it to minimize the impact of your business risks, if they should happen? Examples of insurance that is helpful to small-business owners include:
  • Liability insurance
  • Property insurance
  • Business interruption insurance – for lost income and overhead expenses during a disaster
  • Life and disability insurance – for employees as a fringe benefit and/or for business purposes like funding a succession plan, in case there is a loss of a key person, or collateral for a loan
  • Workers’ compensation insurance – for businesses with three or more employees
  • Health insurance

And Finally, Are You Keeping the End in Sight?

Even if you can’t imagine life without running your business, it is essential to think about what would happen if you could not manage it due to disability, retirement or death.

Do you:

  • Have a business succession plan that considers:  (1) an individual who has the skills, authority and interest in running the business and (2) how the transfer might take place? If you plan to sell, do you know how your successor will obtain the funds to assume ownership?
  • Maintain a retirement plan? Depending on the plan you own, you may be able to reduce your tax obligations today and benefit from tax-deferred growth on the money you save in your plan. A variety of retirement plans are available, from SIMPLE and SEP IRAs to individual 401(k)s and profit sharing plans.

Vice President, Private Wealth Adviser, Procyon Partners

Caroline Wetzel  CFP®, CDFA®, AWMA®, is a vice president and private wealth adviser at Procyon Private Wealth Partners.  She has worked in financial services since 2001 and began specializing in wealth management for affluent multi-generational families in 2015.  Caroline earned a B.S. degree in policy analysis and management at Cornell University and an MBA in finance and advanced certification in marketing from the University of Connecticut School of Business.

Source: kiplinger.com

What Role Should Your Children Play in Your Business Succession Plan?

As a financial adviser, I meet with many successful business founders. Most of them have a vague idea of what should happen if they were no longer able to lead their operations. They have life and disability insurance and sometimes long-term care insurance, but they lack confidence in the infrastructure for maintaining the business if they were not at the helm. However, they have some appreciation for the expense and hard work that will be required to plan for their eventual retirement or death, because I am not the first financial adviser seeking their business.

Generally, these informed business founders’ goals depend on whether they have children interested in taking over the company. Those without potential heirs to the business may be looking for the best exit strategy at the proper time, while parents with adult children may be seeking the means to efficiently transfer equity and control in the right proportions to the right children.

Starting the conversation

Most business founders require several discussions over a few years before they decide to expend the energy to actually develop and implement a foundation for the sale, transfer or succession of their business. Others are too busy running their company to give more than a polite listen to such planning. Still others are actually entrepreneurial private business investors whose business is not operating a business but investing in businesses. I am happy to hold such discussions even while I can plainly see that they are not ready yet to act on any proposals.

The most productive meetings are with successful business operators who have heard it all before and are now ready to implement business succession options. They already understand the time it takes to develop a viable plan; they appreciate how complicated trust strategies and related transactions can be, and they accept the requirement for independent and defensible market valuation. In addition, they have a strong relationship with estate planning and business transactional attorneys. Finally, they have learned the questions to ask to discover if my trust company and I have the capability and expertise to do the work.

Most such founders begin with questions about the trustee’s role and costs to implement already selected strategies to withdraw the most market value from the business, to reduce estate tax exposure and/or to maintain management control while transferring value to their children. They already know that these strategies require the use of irrevocable trusts and other tax entities. They already know whether they are willing to sell the company, if that is the best option.

Thinking beyond customary advice

An adviser’s first inclination may be to follow their lead and launch into a discourse about the structure and administration of complex trusts, or an argument in favor of an experienced corporate trustee situated in an advantageous jurisdiction. From there, an adviser may address how these arrangements go hand-in-hand with some undesirable limitations on access to funds, control elements and fiduciary duties, and the related fees and tax costs.

What an adviser can miss in this approach is just how this kind of planning marks the beginning of the end of something vital and integral to the founder’s sense of self, disrupts her useful purpose or inflames her resistance to sharing control and discretion with strangers, much less with her own children. The better approach is to focus on the founder’s current and anticipated lifestyle, her thoughts on the purpose of wealth, and a frank recognition of her real values, goals and priorities, not the ones we first think are important.

Rather than impressing the business founder with your experience and knowledge, a more helpful approach could be to determine just what he wants to accomplish. What interests does he have outside of the company? What will be his focus if we were to free up time away from the business? What does he value most: wealth preservation, lifestyle, entrepreneurialism, charitable giving or service, investment in children and grandchildren, etc.? How do the children, both active and passive, factor in the sale or transfer of the company? If the primary desire is that one or more of the children take over the company as their life’s work (not an unusual expectation among founders) what factors have priority in dividing income and wealth: fairness, equality, sweat equity, something else?

Prioritizing personal fulfillment

Business founders do not typically think in terms of family governance. But the most useful planning encourages positive values and fulfilling pursuits in the next generation, whether they are recreational, entrepreneurial, charitable, political or some other focus. The founder may not think in terms of life balance, having spent so much time and energy on that one enterprise. And she is often troubled to discover that even the adult children actually working in the business will only accept a balanced approach to family and work.

The second generation of family business owners tends to see the business as a reliable constant and not fully appreciate the relative risks the founder took in the early years to nurture it through many thin business cycles. This is especially true if they were always well sheltered, fed and educated, with money for plenty of activities and interests. They have many choices and continuing to work in the family business is just one option open to them.

Confronting issues of fairness

So, how does the founder encourage the necessary industry and financial acumen for the next generation to be successful? Can the founder efficiently transfer control of the business to the proper people and still appropriately distribute the beneficial enjoyment of his estate among all his children? It is too easy to assume that the most adept child should accept this great opportunity and run the business, while the other children take a backseat. Is it fair to place the children’s financial future in the control of one or two active owners, while the passive owners have little input in business decisions? Is it fair to place the burden of that success or failure just on active owners? Any business succession plan will be fundamentally flawed if it does not address the most important underlying motivations, desires and tensions among these family members.

It is a fact that 1 out of 3 businesses start and end with the founder. Plans to equalize inheritances when a business is involved often end up wrecking fragile sibling relationships. Children with passive ownership can resent their lack of control over business decisions and how profits are used, while the active owners may resent uninformed sibling interference or an estate division that undervalues their sweat equity.

The best planning results follow when the founder includes her adult children in the process of setting clear and fair rules. I encourage even young entrepreneurs to develop and update standards and operating procedures that address adding new investors, funding buyouts, identifying permitted transferees, board membership, business strategy, employment, advancement in the company, compensation, distributing profits and encouraging estate planning.

The corporate trustee must be more than just an administrator. In all likelihood, the business that was the source of income and then wealth for the founder will break up or be sold off even if the trustee continues to custody closely held business interests for his grandchildren. The founder must have the foresight not only to structure the business operations, ownership and the trusts for flexible stewardship that will benefit future generations regardless of the paths they take, but to foster the values, priorities and practices that support a fulfilling life.

Senior Vice President, Argent Trust Company

Timothy Barrett is a senior vice president and trust counsel with Argent Trust Company. Timothy is a graduate of the Louis D. Brandeis School of Law, 2016 Bingham Fellow, a board member of the Metro Louisville Estate Planning Council, and is a member of the Louisville, Kentucky and Indiana Bar Associations, and the University of Kentucky Estate Planning Institute Program Planning Committee.

Source: kiplinger.com

Business Owners Need an Exit Strategy When They Are Ready to Retire

After Karen Bush cleaned out her mother’s overstuffed home 18 years ago, she realized she never wanted to leave that kind of mess for her children. So she tidied up her own house and then helped friends do the same.

Bush, 56, eventually turned this into a business, Great Falls Organizers in Great Falls, Va., with Veronica Falkenberry, whom she met when their daughters played softball together. “We both realized we were doing the same thing but not getting paid. We looked into it and realized this was a viable service that many people could use,” Bush says.

A decade later, the pair is beginning to think about retiring in the next four years, but they are uncertain about how to sell their business. “Really, the business is our expertise and our involvement with our clients,” Bush says.

This uncertainty is something small business owners often wrestle with. Even the owners of the smallest of businesses need to have an exit strategy and should not assume a lack of interested buyers. Because the business is often the owner’s largest asset, the decision to sell has big financial ramifications. “Just waking up one day and wanting to sell your business at a moment’s notice can be catastrophic,” says Rick Miller, a CPA and principal of Miller Advisors, an accounting firm in Brentwood, Tenn. “You must have a plan to sell your business.”

Clean Up the Books

Selling a business can take anywhere from six months to five years. Starting early gives you time to adjust, leading to a better sales price. For instance, Patricia Farrell, an attorney and partner at Meyer, Unkovic & Scott in Pittsburgh, finds that some small business owners don’t have important documents, such as employee confidentiality agreements and vendor contracts, organized and available electronically. The company may not have the right insurance to protect the personal assets of directors and officers in a lawsuit. Farrell ensures all of this gets corrected ahead of time. “Think about it like selling your house,” she says. “To get more money, you might have to spruce up the bathroom and take a look at the gutters.”

You should also separate owner-specific business expenses, such as a company-paid cellphone or car. With these costs removed, potential buyers get a true picture of the company’s finances, and you have a better idea of your expenses in retirement, Farrell says.

Consider having the business’s finances audited, especially if you do the books yourself, says Jon Rubin, a middle market investment banker for family-owned companies and entrepreneurs at Westbury Group in Westport, Conn. An outside review by an accounting firm gives buyers more confidence in your company’s performance.

An accounting firm can also produce a quality of earnings report. Although not a full audit, it validates the company’s reported earnings and identifies onetime expenses and other adjustments to show a more profitable business. This also gives you an expert to refute any concerns the buyer raises during due diligence. Without that help, “it would be like arriving unarmed to a gun battle,” Rubin says.

Pricing and Taxes

Advisers use different methods to price a company. One way is to compare the valuations of publicly traded companies that are similar to the privately held business up for sale. Another is to look at acquisitions of similar companies with publicly disclosed prices. A third method is a discounted cash flow analysis, which forecasts the value of the acquisition based on anticipated future cash flow, Rubin says.

Buyers generally base what they’re willing to pay on a multiple of the seller’s earnings before interest, taxes, depreciation and amortization, or EBITDA, says Stuart Smith, national director of business value strategies at Wilmington Trust in Wilmington, Del. Sellers with stronger fundamentals, such as loyal customers and better margins, receive higher multiples.

The sale of a business also has tax implications for the owners. Most small businesses organize as a passthrough entity, such as S corporations or limited liability companies, with earnings passed on to owners who are taxed at their individual rates. In contrast, C corporations pay taxes at the corporate level before any earnings are passed on to shareholders.

The proceeds from a sale of a pass-through entity are only taxed once — when owners pay their personal federal income taxes — rather than potentially twice for a C corporation (once at the corporate level and again when shareholders pay personal income taxes on their share of the proceeds), depending on the transaction’s structure. That can make pass-through entities more advantageous for some business owners.

In general, sellers may also want to structure the deal so that more of the proceeds are taxed as long-term capital gains, which have a top rate of 20%. If the proceeds are taxed as income, the tax could be as high as 37%, depending on the owner’s federal tax bracket. Whether to sell business assets or stock can be part of that decision. “The most common pre-planning task a seller should perform is a hypothetical calculation under each of those scenarios to see how the results can vary,” says Kurt Piwko, a partner in the national tax office for Plante Moran in Southfield, Mich.

As you consider offers, the potential buyer’s plans for your company may be a factor. If you want your business to survive you, don’t choose a buyer who wants your company solely for the market share. Entrepreneurs hungry to grow your company may be more appropriate. Owners who care about their employees might consider selling the business to an employee stock ownership plan, or ESOP, Miller says. The ESOP, which acts as a retirement account for the employee-owners, is overseen by a trustee, who would negotiate the deal. Retiring employees receive a payment based on the value of their shares.

The form of the payout can also vary depending on the buyer, Rubin says. For instance, buyers that are large publicly traded companies or privately held firms that make strategic acquisitions often prefer all-cash deals. If a private equity firm is the buyer, you’re more likely to get some cash upfront as well as some rollover equity in the new company. An investment banker or a business broker can help you explore different options and identify potential buyers. For companies worth at least $5 million, Rubin recommends hiring an adviser that is registered with the Financial Industry Regulatory Authority.

What Comes Next

Selling a business can be like “the grieving process,” Smith says, noting that some sellers get cold feet and back out of the sale. “For many of these owners, they have built their business up with blood, sweat and tears,” says Michael Lindquist, a private client adviser at Bank of America Private Bank. It’s not easy to let go.

Moving on may be a lot easier if you know how you’ll fill your time. Many of Lindquist’s clients wait a few years before starting another business. Some continue working for the company as an employee or independent consultant for a set number of months after the sale of the business is final. If that’s your plan, work out those details during negotiations, but bear in mind it may be hard to watch someone else make decisions for the company you built.

About seven years ago, Mike Glicksman, 64, of Wyckoff, N.J., decided to sell his company, which manufactured covers for flat screen televisions and keyboard protectors. He had run the business since the early 1980s. An employee who had worked with Glicksman almost from the beginning bought the business and paid for it over six years. Glicksman says he thought the new owner would need him to stay heavily involved as an adviser, but that wasn’t the case.

Initially, Glicksman struggled with what to do next. He bought a company that mailed coupons to consumers but dissolved it after two years. Eventually, he turned to volunteer work, including serving as vice chair of the northeast New Jersey chapter of SCORE, a national network of mentors who work with other business owners. Now he spends about 25 hours a week volunteering and finds it extremely rewarding. “Owning your business kind of identifies you,” he says. “Before selling, really have a plan. Think about what you want to do next, and actually write it down.”

Source: kiplinger.com

SOTM 48: Stuck in a Sales Slump? Ways to Get More Real Estate Business with David Greene

What can real estate agents do to beat a sales slump? On this State of the Market, BiggerPockets Podcast co-host David Greene shares what he did to triple his real estate business. We also cover cutting-edge strategies for making sales, including how to win buyer clients by becoming an expert on today’s tighter mortgage requirements. Plus, with news of iBuyers coming back, we discuss why companies like Zillow can’t match a real estate agent’s secret weapon.


Listen to today’s show and learn:

  • How shelter-in-place orders could affect consumers’ housing preferences [4:06]
  • Why a new Fannie and Freddie rule may impact the mortgage industry [14:49]
  • What real estate agents need to understand about mortgages right now [16:26]
  • How the government’s efforts to help are hurting landlords [21:52]
  • Why lower prices on listings aren’t a sure sign of home values decreasing [27:34]
  • Advice on how to get out of a sales slump [31:54]
  • Zillow to return to iBuying with new safety protocols [41:07]
  • Real estate agents’ secret weapon [44:25]
  • How to break through your goals.
  • Plus so much more.

David Greene

David Greene is a former Police Officer and co-host of the BiggerPockets Real estate podcast. The author of best selling books “Long Distance Real Estate Investing”, “Buy, Rehab, Rent, Refinance, Repeat”, and “Sell Your Home For Top Dollar”, David is passionate about helping others build wealth through real estate and runs the blog “GreeneIncome.com”. A nationally recognized authority on real estate, David has been featured on CNN, Forbes, and HGTV as well as over 25 different real estate podcasts. A licensed real estate broker and lender, David runs “The David Greene Team”, a top producing real estate company in Keller Williams where he has won multiple awards for production and teaches agents how to excel in building their business. An active real estate investor, David owns single family properties across the county, shares in apartment complexes, notes, shares in note funds, and flips houses.

Related Links and Resources:

Thanks for Rocking Out

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Source: hibandigital.com

I’ve Lived in Debt My Whole Life and Am Ready To Change (Hour 2)

Debt, Retirement, Business, Career, Budgeting

As heard on this episode:

  • SimpliSafe: https://bit.ly/37NBd9g 
  • Burst Oral Care: https://bit.ly/3lCENep 

Sign Up for a FREE trial of Ramsey+ TODAY: https://bit.ly/31ricKt 

Tools to get you started: 

  • Debt Calculator: https://bit.ly/2QIoSPV
  • Insurance Coverage Checkup: https://bit.ly/2BrqEuo
  • Complete Guide to Budgeting: https://bit.ly/2QEyonc

Check out more Ramsey Network podcasts: https://bit.ly/2JgzaQR

Source: daveramsey.ramsey.libsynpro.com

SOTM 3: Purplebricks Ditches Discount Model and Microsoft Invests in Affordable Housing

Big news to cover on this week’s State of the Market podcast! Purplebricks opts to ditch its discount model and replace it with that of a more traditional brokerage. Microsoft puts $500 million toward affordable housing in Seattle. Plus, we discuss a string of recent attacks on real estate professionals and offer advice on staying safe when meeting with new clients.

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