Strategies for Business Owners

For clients who are self-employed or own a business with employees, we work with you and your tax and legal advisors to design qualified retirement plans, group benefits, succession plans and non-qualified programs for key employees.  

Strategies for Business Owners -

Whether you spent half your life building a successful business or worked extraordinary hours to bring an established firm to the next level, we understand that your business may be your most significant asset.  The financial success of your business can have a direct impact on the economic security of your family.  Without proper planning you could have difficulty accessing the value of your business at retirement and your family could lose significant value at your disability or death.

In our work with successful business owners, and their tax and legal advisors, we explore a wide range of strategies to help them manage risk, reduce taxes, retain key employees and structure the sale or transfer of their business. Strategies and tax issues vary depending on how your business is organized.

Succession and Buy/Sell Planning

Succession plans focus on the transition of your business to a family member or a new owner.  While factors vary depending on the business and industry there are some items common to all successful business transitions including - a sell-able business, a signed document that outlines how the business will be valued, the specific transition mechanics to be used at time of sale and a method to fund the sale.

Split Dollar & Non Qualified Plans

These plans are frequently designed as an incentive for key employees above and beyond basic benefits and qualified plans.  Depending on the design, the business can own the policy and the death benefit is split between the employee and the business.  The agreement outlines when and how the benefit will be rolled out to the employee.

Key Person Coverage

Small and closely held businesses often depend on key individuals for their own success.  Key Person insurance is a life and/or disability policy taken out to help offset the loss that occurs if a key member of your team becomes disabled or dies.  The policies are typically owned by the business and the benefit is used to help replace the lost income or sales.  These policies can be in addition to individual disability and/or life insurance coverage that directly benefits the employee and their family.  

Individual Disability Income & Business Overhead Coverage

What happens if the owner or a partner becomes disabled?  In many cases, the loss of income to the firm could destroy the business.  The U.S. Census Bureau notes that 1 in 5 small businesses will suffer a disruption caused by the permanent or partial disability of a key professional.

An individual disability policy provides income to the disabled partner or owner.  But what about day to day overhead expenses?  If that owner or partner is not generating revenue for the business and fixed expenses remain, there may be no business for the owner or partner to come back to.

There are both disability overhead and disability buy/sell policies.  A disability buy/sell policy provides a lump sum for buying out an owner or partner after a set period of time.  A disability overhead policy is designed to  provide payments up to the monthly benefit for qualified "overhead" expenses.  A overhead expense policy may cover --

  • Qualified employee salaries (not the salaries of other professionals or partners in the business) and may cover the cost of a replacement to fill the disabled professional's position temporarily.
  • Rent
  • Principal and Interest on Debts
  • Mortgage Payments
  • Monthly Average Taxes
  • Utilities
  • Postage and Incidental Costs
  • Equipment Maintenance

Long Term Care Insurance

In some cases paying the premium for long term care insurance can be a fully deductible discriminatory benefit.  The rules vary depending on the kind of entity and ownership.  For example, a long term care insurance premium can be fully deductible for the owner of a C Corporation, a less than 2% owner of an S Corporation and for non-owner employees.

Having the proper plans in place will help ensure that you and/or your family can reap the benefits of the business you worked so hard to build.  We, along with your tax and legal advisors, can help you develop and implement a prudent and workable plan.


 "This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor."

No strategy assures success or protects against loss.

Guarantees are based on the claims paying ability of the issuing company.

Please keep in mind that insurance companies alone determine insurability and some people may be deemed uninsurable because of health reasons, occupation, and lifestyle choices.