U.S Trust recently released its 2013 Insights on Wealth and Worth, an annual survey of high net worth and ultra high net worth Americans. Of particular note was its Fact Sheet on business owners, which sought to gather information that could explain the attitudes, expectations, and concerns of business owners and entrepreneurs across the U.S. as it relates to business ownership, personal wealth and wealth management. Though the survey specifically targeted high net worth and high net worth households, the lessons learned from this survey are applicable to business owners at all income and net worth levels.
As reported in the 2013 survey, business owners face a particular set of challenges when it comes to their personal wealth management practices throughout their careers and retirement in spite of, or maybe due to the fact that they own a business. Such challenges include the relationship between business growth and increased taxes, and choosing to provide financial support to family members.
Compared to other high net worth households, business owners usually earn a higher income. However, the intense amount of time and attention owners apply toward the success of their business sometimes causes them to neglect their personal finances. Wealth and business planning should be an integral part of every individual and family, but business owners often put business ahead of personal, which can cause them to become susceptible to risks involving their personal financial security.
The survey found that the majority of business owners are completely self-made: 78 percent of them founded or co-founded their business, with 7 out of 10 business owners accruing the majority of their wealth through income from their business. However, while the businesses were thriving, many of these business owners shared common challenges in the form of taxes, talent and lack of comprehensive planning.
Putting preventative legal practices into place and continuing to act on these good "habits" can help you avoid legal disputes, injuries and damage claims. Business planning comes into play even when your business is already established and growing. Performing a periodic legal assessment, or “checkup” if you will, of your business can help you avoid potential legal issues that may arise and allow you to spend your valuable time on your business.
Think of this checkup as a physical exam that can identify health problems. You don't (or shouldn't) ignore health problems a doctor may find during a routine exam - you look into it. So conducting an analysis of your business' legal health on a regular basis will hopefully lead to you addressing the issue(s) in order to minimize the possibility of encountering legal pitfalls.
We have prepared a Business Legal Checkup that is uncomplicated and concise, covering all the bases as they relate to the legalities of business ownership. Below is a breakdown of the categories we included in the checkup:
- general organization of business entity
- employment issues
- contract issues
- risk management- asset protection
- business succession (we'll elaborate on this in our next blog).
Click here to download a copy of the Business Legal Checkup and perform your own self-assessment of the legal health of your business. Afterwards, don’t hesitate to contact us if you have any questions or concerns about any areas in the Checkup or if you would like to discuss your particular challenges of business ownership, whether you are just starting up your business, have a thriving business with operational issues, or planning to buy or sell a business. Give our Nevada office a call at 877-905-0890.