The Entrepreneur’s Corner

Here’s an important question for busy business owners – what’s next for your company? Not just tomorrow or even in the months ahead, but when the time comes that you or one of your key employees retires or leaves the organization unexpectedly?

At a time when many baby boomers are thinking about retirement, those who own a business need to plan not just for their life after work, but for the future of the firm they’ve committed so much of their lives to. In a small- or mid-sized business, the owner and perhaps other key personnel play such a vital role that special planning is required to prepare for circumstances in which any of these individuals is no longer part of the organization. If your business doesn’t have a succession plan in place, it is an issue that needs prompt attention.

There are a number of questions to consider in helping prepare for the period of transition a company inevitably faces. They include:

• Who is in line to follow the principals of the firm? The most fundamental aspect of a succession plan is to have a replacement (or replacements) in line. In many cases, a family business will move from one generation to the next. In other situations, a trusted employee or group of employees may need to be groomed and prepared to assume control of the company in the future.

• How will control of the business be transferred? Once successors are identified, there are a variety of ways that control of the business can be transferred to them. Among the options are an outright sale to the new owner – either in a one-time transaction or an installment sale – or the use of a trust vehicle, such as a grantor retained annuity trust (GRAT) or a grantor retained unitrust (GRUT). Those are irrevocable trusts to which you transfer appreciating assets while retaining an income payment for a set period of time. At either the end of the payment period or your death, the assets in the trust pass to the other trust beneficiaries (the remainder beneficiaries). The value of the retained income is subtracted from the value of the property transferred to the trust (i.e., a share of the business), so if you live beyond the specified income period, the business may be transferred to the next generation at a reduced value for estate or gift tax purposes.

An important consideration in the decision-making process is potential tax ramifications, particularly for the seller. There are tools available to help reduce the potential impact of capital gains, estate and gift taxes when a sale occurs. Good planning plays a critical role in making sure that both the seller and the buyer achieve the most favorable results.

• What forms of protection are in place in case an unexpected event occurs? The need to implement a succession plan can sometimes strike without notice. Businesses that involve partners or likely successors, for example, may benefit from having a buy-sell agreement in place.

A buy-sell agreement lets you keep control of your interest until the occurrence of an event that the agreement specifies, such as your retirement, disability, or death. Other events, such as divorce, also can be included as triggering events under a buy-sell agreement. When the triggering event occurs, the buyer is obligated to buy your interest from you or your estate at the fair market value. The buyer can be a person, a group (such as co-owners), or the business itself. Price and sale terms are prearranged, which eliminates the need for a fire sale if you become ill or when you die. Remember, however, that you are bound under a buy-sell agreement.

Business succession is a complex matter. It involves close work with a financial advisor, tax specialist and an attorney experienced in these types of matters to structure a solution that is most suitable for your business and potential successors.

Justin R. Martin is an associate financial advisor with Ameriprise Financial Services, Inc. Contact him at (804) 320-3105 or .(JavaScript must be enabled to view this email address).
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Henrico Public Library wins Virginia Breast Cancer Foundation grant


The Henrico County Public Library system recently won the Virginia Breast Cancer Foundation's Library Grant Award, which provides funding, materials and programming from VBCF to help educate citizens about breast cancer.

The grant is given to select libraries in Virginia that apply and is intended to further the VBCF mission to educate the public about breast health and breast cancer. > Read more.

Pet Valu to open in Glen Allen Aug. 26


Pet supplies and accessories retailer Pet Valu will open at 5304 Wyndham Forest Drive in Glen Allen Saturday, Aug. 26.

The store will offer free samples, goody bags, refreshments, raffles and prizes and kid- and pet-friendly entertainment during its first day of business from 9 a.m. to 9 p.m. > Read more.

State issues warning about purebred puppy scam


Virginia Attorney General Mark Herring is warning Virginia consumers about an active fraud involving purebred puppies.

Herring's Consumer Protection Section recently has received a number of reports of consumers entering into agreements to buy a pet with a company they found online, later to learn the website and the company are a scam – and that no such puppy ever existed. > Read more.

Kaine, McEachin to host Service Academy Day


Congressman A. Donald McEachin (VA-04) and Senator Tim Kaine (D-VA) will co-host their Service Academy Day to educate high school students about the service academy nominations process, an honor awarded by members of Congress for students interested in attending a service academy after high school.

The event will take place Saturday, Sept. 16, from 10 a.m. to noon, at Matoaca High School, 17700 Longhouse Lane, Chesterfield 23838. It will provide an opportunity for high school students and parents to learn about the nation’s military academies, a career in military service and the nominations process. > Read more.

Red Cross, Sport Clips offer free haircuts to blood donors


The American Red Cross and Sport Clips are partnering to provide free haircuts to anyone who donates blood or platelets to the Red Cross during September.

Blood donors of all blood types, especially type O negative and O positive, are urgently needed to replenish the blood supply following a critical summer blood shortage. > Read more.

Henrico Business Bulletin Board

August 2017
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The Cultural Arts Center at Glen Allen will host a Happy Hour Art Class from 6 p.m. to 8 p.m. Instructor Nancy Jacey will show you how to create a whimsical piece of art to take home – today’s project is Sailboat Silhouette. Enjoy a complimentary glass of wine while you paint; additional glasses or bottles may be purchased. Cost is $35. To register, call 261-ARTS or visit http://www.artsglenallen.com. Full text

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