This brochure has been prepared to help the family business owner tackle two very important issues:
Therefore, let's assume that you have a cooperative business owner who wants to address these issues by tackling the following:
In summary, statistics reflect that over 55% of business owners die without a will and that only 15% of family owned businesses make it to the second generation. If you want to make sure that your business will succeed you, it is necessary to establish an estate plan to facilitate that process.
If there are children who are interested in running the business and want to continue operations for the 2nd and perhaps 3rd generation, there are specific issues to address with the family's attorney and accountant.
Retirement... it does sound good, but are you ready financially? Concern regarding the instability of Social Security continues to grow and we are looking for new ways to secure our future. Individual Retirement Accounts (IRA) through Vision Bank are one of the ways that you can plan your future retirement. There are several types of accounts that you can choose from; Traditional IRA, a ROTH IRA, or a SEP IRA (Simplified Employee Pension Plan). In deciding which IRA would be the right one for you, it would be wise to consult your tax professional.
For instance, there could be a tax advantages to your business for you to open a SEP plan, but there are certain restrictions that your tax professional could help analyze.
A Traditional IRA has been a long time favorite for many people. You can begin an IRA with as little as $200 at Vision Bank and make regular deposits into it up to the maximum contribution limit. (Beginning in 2008 you can contribute $5000 per year and up to $6000 if you are age 50 or over). All earnings on your traditional IRA remain tax deferred until you make withdrawals from the account. Deductibility of your contribution is based on your modified adjusted gross income and income tax filing status. Once again your tax professional can help you determine your actual deduction.
The ROTH IRA has become very popular. We have seen a growth in the amount of Roth IRA's being opened. The Roth does have certain income limits and it is a nondeductible account but, it features tax free withdrawals for certain distribution reasons after a five-year holding period. That is the best part of the Roth IRA. When you are ready to take a withdrawal, you pay no taxes on any of the earnings that your money has generated (providing it is a qualified distribution). People expect to be in a higher tax bracket when they retire may benefit more from a Roth, than from a traditional IRA.
You can decide which is a greater priority for you: minimizing your taxes now through a deduction (traditional IRA) or minimizing your taxes in the future with tax free earnings.
Simply see any of our Personal Bankers at Vision Bank. They can explain the IRA accounts to you in more detail and help you complete the forms necessary to establish your IRA.
This business owner's first task is to determine what will happen to his or her business upon death. The alternatives are: (1) sell or merge, (2) liquidate, or (3) continue for the benefit of the survivors. While no asset plan will apply to every situation, there are some common problem areas that business owners and their professional advisors should consider in establishing a plan for clear continuity.
Management succession is the single most important task that must be accomplished in order to insure the smooth and successful transition. Several questions must be asked such as:
Provisions for liquidity can be made through a combination of life insurance and personal savings while income provisions can be made through deferred compensation plans, redeeming stock and or dividends. Determining the value of a closely held business can often be difficult. A buy/sell agreement is one way to set a value at the time of death to possibly avoid any prolonged and costly argument with the IRS.
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