Updated July 21, 2015
Business Continuation Planning Chicago Illinois
What is business continuation planning?
Business continuation planning Chicago Illinois is the orderly transition of a business from one generation to the next. Why is this generally difficult? Taxes.
Let’s explain this through a couple of scenarios:
Let’s say that a business owner passes on, and no business continuation plan has either been put in place or begun. The Internal Revenue Service has guidelines established for the specific way that a business must be valued for estate tax purposes. Trust me, this isn’t terribly reasonable. For our example, let’s say that the entire estate is worth $5,000,000. This number is broken up as follows: $1,500,000 for the business, $500,000 in cash and securities, $200,000 in personal property and $2,800,000 in real estate. If the estate tax credit at the date of death is $2,000,000, then the estate would pay tax on $3,000,000 or roughly $1,650,000 in tax. If the business had been transferred to the next generation prior to the death, then the value of the estate would only be $3,500,000 and the tax would only be roughly $825,000. If in addition to the business being transferred, the real estate had been put into a trust, then there would be no estate taxes due at all.
Do not try to face this on your own.
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Chris Amundson is the President of Accounting Solutions Ltd., a full service public accounting firm of Certified Public Accountants and Enrolled Agents handling the bookkeeping, accounting, tax preparation, and audit representation needs of Businesses, Estates, Trusts, and Upper Income Individuals.