What You Should Know About Starting a New Business

From Brett Lee Shelton, Family Business Lawyer™

Whether you’re a baby boomer who wants extra retirement income or an entrepreneur who prefers working for yourself, there are certain steps you need to take in starting a new business.  These include:

Business plan. Your top priority should be to develop a comprehensive business plan that will spell out what products or services you will be offering, market analysis, pricing, financing, location and financial projections.  If you’ve never written a business plan, you can get samples and instructions at bplans.com or sba.gov.

Business structure. You have several choices in deciding on the right business structure for your start-up, including sole proprietor, partnership, Limited Liability Company (LLC) or corporation.  This is when a consultation with a Creative Business Lawyer™ is necessary, especially if you have personal assets you wish to shield from any potential business liabilities.

Business name.  Once you have chosen a name for your business, you should register your name as a DBA in the county where your business is based.  You will likely want to trademark your name as well.

Business permits and tax documents. You may need to acquire a city business license (different cities have different rates and some are more favorable than others), a federal and state employer identification number, and a number of other documents.  If you plan to lease a location, you should have your attorney review your commercial lease agreement.

Business insurance. Depending on what kind of business you plan to operate, you may need to secure liability insurance for your business.

If you are thinking about starting a business, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.  Call us today at 303-255-3588.

How To Leave Your Home To Your Kids

From Brett Lee Shelton, Personal Family Lawyer™

Many parents want to know the best way to leave a home to their children. Before you make a plan, you should first be sure that your children actually want the property. We have seen too many parents take on unnecessary financial hardship in order to keep a home as an inheritance their children do not truly want.

That said, here are some of the most common ways to leave your home to your kids:

Will. You can leave real estate to anyone in your will. Once the will has been probated, your children will receive title to the property.

Trust. Using a trust is a convenient way to transfer property without having to go through probate. Title is transferred automatically upon a triggering event — in this case, the death of the original property owner.

Joint tenancy with right of survivorship. This method allows you to add your children to the property title while you are still alive. When you pass, the children become owners of the property as surviving joint owners.

Transfer on death deed. This allows you to name a beneficiary for your property without giving a present interest in it to the beneficiary. Upon your passing, the beneficiary takes title.

Life estate. You can transfer title to the property while you are still living, and retain the right to live there during your lifetime. After your death, the beneficiary owns the entire interest in the property.

There are pros and cons to each of these options.  Deciding on the best option for you and your family should be done with the assistance of a Personal Family Lawyer®.

If you’d like to learn more about estate planning, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call 303-255-3588 today and mention this article.

The Challenges Facing Small Business in 2013

From Brett Lee Shelton, Family Business Lawyer™

According to a December survey by The Wall Street Journal and Visage international, approximately one-third of small business owners say that economic uncertainty will continue to be the single largest obstacle to long-term growth for their companies in 2013.

The online survey of almost 1,000 small business owners representing a range of industries, all with less than $20 million in annual revenue, also revealed other challenges on the minds of these small business CEOs for the coming year:

Rising taxes. Most small business owners claim business profits on their personal returns, so the rise in the top tax rate for individuals with income over $400,000 to 39.6% could mean an extra tax bite this year. Some small business owners say they are already exploring ways to lower taxable income, with strategies like maximizing contributions to retirement funds and matching employee contributions to 401(k) plans.

Healthcare. The Obamacare law passed in 2010 will require employers with more than 50 workers to offer health insurance by 2014. Small business owners who fall into this category expect their labor costs to rise and are still awaiting guidance on what they need to do to meet the minimal requirements under the new law. Only 14% of those surveyed said they had a “clear understanding” of the new healthcare law.

Access to capital. Although the Federal Deposit Insurance Corporation has reported that commercial loans are on the rise, many small business owners are still struggling to gain access to capital for expansion. Some small business owners note they are turning to alternative forms of borrowing, including asset-based lending, to fund growth. While the JOBS Act passed last April will allow small firms and startups to raise capital via crowdfunding, the Securities and Exchange Commission has still not issued guidelines on the new law.

The time has never been better for small business owners to schedule a comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.  Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.  Call 303-255-3588 now!

Tips to Help You Reboot Your Retirement Plan

From Brett Lee Shelton, Family Business Lawyer™

Planning for a long and prosperous retirement is no longer just about the money; because of the recession, boomers need to reboot their retirement plans. Here are six tips to get you on the right track again:

1. Get healthy. This should take priority even over saving more money, since significantly improving your physical health will reduce the chances you will need expensive healthcare procedures. Exercise more, eat better and take advantage of any wellness programs offered by your employer.

2. Spend less. Prioritize what you need versus what you want, and focus on spending just enough to meet your needs.

3. Save more. Add more to your 401(k) or IRA; increasing your savings by just 1 to 2% of your pay can make a noticeable difference to your savings without impacting your current lifestyle.

4. Pay off debt. Research shows that people who reduce or eliminate their debt prior to retirement do a lot better than those who carry debt into retirement. Pay off as many of your credit cards as possible and consider refinancing your house to take advantage of historic low mortgage rates.

5. Continue working. Most boomers will need to work at least part-time once they retire. Start investigating the kind of work you might enjoy doing. If you earn enough to cover your daily expenses, you won’t have to touch savings, which can continue to grow until you are fully retired.

6. Maintain your network. Retirees with a large network of friends and family do better in retirement and live longer. Be sure you continue to nurture your network as you ease your way into retirement.

If you’d like to learn more about how the new tax laws will affect you, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call 303-255-3588 today and mention this article.

The Fiscal Cliff Tax Deal: For Most of Us, It’s a Wash

From Brett Lee Shelton, Personal Family Lawyer™

The American Taxpayer Relief Act of 2012 that Congress passed on New Year’s Day extended the Bush era tax cuts, but the benefits of those cuts for most American taxpayers will be offset by a 2% increase in payroll tax.

According to the Tax Policy Center, a nonpartisan Washington research group, less than 1% of American households will see an increase in income taxes this year. Here are the specifics of what the bill that President Obama signed into law on January 2 entails:

Income tax

The Bush era tax cuts were extended permanently for individuals making less than $400,000 annually and married couples earning less than $450,000 annually. Those making over these amounts will see the top tax rate increase from 35% to 39.6%.

The personal exemption phase-out (PEP) and itemized deduction limits (Pease) were extended, with a cap of $250,000 for individuals and $300,000 for married couples.
Tax rates for capital gains and dividends increased 20% for individuals earning more than $400,000 per year and married couples with annual income of $450,000.

The alternative minimum tax (AMT) exemption increases to $50,600 for individuals and $78,750 for married taxpayers filing jointly, and is permanently adjusted for inflation.

The charitable IRA rollover has been extended for one year. This means that those over the age of 70 1/2 with traditional IRAs can funnel their required minimum distributions to an IRS-approved charity. Those who waited until December 2012 to take their required minimum distribution have until the end of January to transfer those funds to a charity for 2012, but cannot make the contribution directly. You must contact the financial institution holding your IRA and request the donation.

Several individual tax credits – including those for college tuition, child tax credit and earned income tax credit – have been extended for five years.

Estate and gift tax

Good news here. The individual federal estate tax exemption stays at $5 million per individual, adjusted for inflation. Over that, a top tax rate of 40% applies. The annual gift tax exclusion limit is $14,000 for 2013, with a lifetime gift tax exclusion of $5 million.

Payroll tax

As expected, payroll taxes will increase 2% in 2013. The rate goes from 4.2% to 6.2% on the employee portion of Social Security contributions.

If you’d like to learn more about how the new tax laws will affect you, call our office today at 303-255-3588 to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.

How To Prepare Your Small Business For A Profitable Sale

From Brett Lee Shelton, Family Business Lawyer ™

When you started your own business, you probably didn’t give much consideration to selling it. However, with statistics showing that 80% of a small business owner’s net worth is tied up in their company, preparing your business for a profitable sale should be on your radar.

Whether you plan to sell your business outright or transfer to partners or family members, here are some steps you should take to protect your assets:

Know what your business is worth. Getting a professional valuation of your business is key to a profitable sale. Be sure that whoever values your business has expertise valuing businesses in your industry.

Build your business as an investment. The eventual buyer for your business is looking for a good investment, one that will continue to pay long after you are gone. Build your business as an investment by having a diversified management team that has some skin in the game, so they will stay on after the sale. Having a business that provides recurring revenue is also more attractive to buyers, so be sure your growth strategies are built on a solid foundation.

Have written plans and processes. If your business plan exists only in your head, this is a sign to buyers to beware. Be sure your plans and processes are well documented so that new ownership can step in and run the business seamlessly.

Take taxes into consideration. When determining the best time to sell your business, take taxes into consideration. Funding a retirement plan for employees and other tax saving strategies should be employed to shelter assets from taxation.

If you’re a small or mid-size business owner, call us at 303-255-3588 today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee.

What the Fiscal Cliff Tax Deal Means for Small Business

From Brett Lee Shelton, Family Business Lawyer™
Congress passed the American Taxpayer Relief Act – aka, the fiscal cliff tax deal – in the wee hours of January 1, 2013, and President Obama is expected to sign the new legislation as soon as possible. After the dust from the deal-making settled, the bill contains a mixed bag of both good and bad news for small business, as outlined at Forbes.com:
The Good News
Makes permanent the tax rates on ordinary income, estate, dividends, capital gains and alternative minimum tax rates. The AMT exemption increases to $50,600 for individuals and $78,750 for married couples, and is retroactive to Dec. 31, 2011.
The Research and Development tax credit is extended through 2013 and made retroactive for 2012.
Section 179 limits kept in place – maximum of $500,000 and $2 million phase-out for 2012 and 2013.
Work Opportunity Tax Credit extended for 2013.
Accelerated Depreciation — 50 percent expensing for qualifying business assets purchased and put into service before Jan. 1, 2014 (Jan. 1, 2015 for select long-term assets and transportation).
The Mixed Bag
Income – tax rates raised from 35 percent to 39.6 percent for individuals making $400,000 or more and married couples with income over $450,000. Since most small businesses are organized as LLCs, partnerships or S Corps, owners are taxed at the ordinary income rate.
Capital Gains and Dividends – top tax rate increases to 20 percent, beginning at the $400,000 level for individuals and $450,000 for marrieds.
Estate Tax — $5 million exemption per person kept in place and indexed for inflation and top tax rate increased to 40 percent. Portability is kept in place, as is $5 million exemption for gift tax purposes. All permanent.
PEPS and Pease – the Bush tax cuts eliminated the phase-outs of personal exemptions and certain itemized deductions — known as PEPS and Pease – but there are now back for individuals making more than $250,000 and married couples with income above $300,000.
The new fiscal cliff tax deal did nothing to stop the 0.9 percent tax increase on ordinary income over $200,000 for individuals and $250,000 for married couples, nor the 3.8 percent additional tax on capital gains and taxes that were included in the Obamacare legislation. Those both went into effect as of Jan. 1, 2013, as did the payroll tax jump of two percent, from 4.2 percent to 6.2 percent on all earned income up to $113,700.
If you’re a small or mid-size business owner, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit. Normally, this session is $1,250, but if you mention this article and we still have room on our calendar this month, we will waive that fee. Just call 303-255-3588 today.

5 Things We Should Learn From Our Parents About Retirement

From Brett Lee Shelton, Family Business Lawyer™ and Personal Family Lawyer™
When we talk about retirement, most of us are still thinking about our parents’ retirement and how they did – or did not – plan properly for it. It’s no big stretch to think that our retirement will differ significantly from that of our parents, but there are still lessons to be learned from them in preparing:
1. Seek out a pension plan. If you are considering a career change or job move, look for companies that offer traditional pension plans. Having a pension can make an incredible difference in retirement security.
2. If you don’t have a pension plan, compensate. Start investing now in a 401(k), an IRA or other defined contribution plan early and keep investing in it throughout your working life. Figure out what you could have made if you had a pension plan, and contribute that amount to your own plan.
3. Save for a long life. None of us lives forever, but that doesn’t mean you shouldn’t save as if you would live forever. Running out of money in your 80s or 90s should you live that long is a frightening prospect; medical advances are extending life spans and you need to save for a long life.
4. Plan for health care expenses. It is estimated that most Americans will spend at least $240,000 on health care in retirement, and you will either need to save that amount or have a health coverage plan in place to cover your retirement medical costs.
5. Start early and stay the course. As soon as you start working, aim to save at least 10 percent of your income every year – 15 percent is even better if doable. And keep saving throughout your working years. As your salary increases, try to set aside even more so the comfortable retirement you envision can become a reality.
If you’d like to learn more about retirement planning strategies for your family, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call (303) 255-3588 today and mention this article.