What is One Person Company (OPC) Registration? Know OPC Benefits.

Jan 21 2024 Published by admin under Uncategorized

The thought of One Person Company in India it introduced over the Act, 2013 of companies to help organisers who on their own are capable of beginning a venture by permitting them to create a single person economic existence. One of the biggest benefits of a One Person Company (OPC) is that there can be solely one member in an OPC, while at least of two members is required for organising and maintaining a Limited Liability Partnership (LLP) or a Private Limited Company. Related to a Company, a One Person Company is a separate legal reality from its promoter, offering limited liability protection to its sole shareholder, while possessing continuity of business and happening easily to incorporate.

By the One Person Company provides a lone Businessperson to operate a corporate entity including (LLP) limited liability protection, an OPC does have a few conditions. For example, each (OPC) One Person Company must specify a nominee Director in the AOA and MOA of the company – who will become the owner of the OPC in case the sole Director is disabled. Also, a One Person Company must be changed within a Private Limited Company if it crosses the yearly turnover of Rs.2 crores and must file examined financial statements with the Ministry of Corporate Affairs at the end of every Financial Year like all kind of Companies. Therefore, it is important for the Entrepreneur to carefully recognise the features of a One Person Company prior to incorporation.

Finacbooks is the Leader of the market in company registration services across the India, giving a variety of company registration like one person company registration, private limited company registration, Producer Company Registration, Section 8 Company Registration and Indian Subsidiary registration. The ordinary time taken to complete a one person company registration is regarding 10 – 15 working days, subject to government processing time and document submission of client. Get a free consultation for (OPC) one person company registration and setup of the business in India by listing an appointment by Advisor of a Finacbooks team.

What is a One Person Business Called?

A sole proprietorship, otherwise called the sole trader, singular business or proprietorship is a kind of big business that is claimed and run by one individual and in which there is no legitimate qualification between the proprietor and the business element.

The Incorporating Process of OPC is as Follows:

Paid up capital shall be Minimum Rs. 1, 00,000. It will have only OPC as member.
Memorandum of Association of such an organization will imperatively appoint the name of the person, who in the event of death or disability of the subscriber shall assume his position.
The member of the (OPC) one person company will have the right to change the nominee at any time with due intimation to the Registrar.
(OPC) one Person Company can be formed as company limited by share capital or limited by unlimited company or guarantee.
The words ‘One Person Company’ will be mentioned in brackets under the name of such company, wherever its name is printed.
Company – One person can form only up to one (1) OPC.
A One Person Company can be formed only by an Indian Resident and citizen.
DIN (Director Identification Number) for all the Directors are required.
DSC (Digital Signature Certificate) for all over the Directors is required.

What Are the Benefits of One Person Company?

Existence of Independent Person
Limited Liability
Separate Property
Shares Transferability:
Savings and Tax Flexibility:
Complete Control of the Company with the Single Owner:
Legal Status and Social Recognition for Your Business:

Who Can Be Nominee in OPC?

Nominee one is an individual selected by the individual from the one person company (OPC) who will, in case of supporter’s demise or his in ability to contract becomes part/investor of the OPC. To get selected, the person must be Indian resident and occupant in India however ought not to be a minor.

Comments are off for this post

How to Use QuickBooks Connection Diagnostic Tool?

Jan 21 2024 Published by admin under Uncategorized

QuickBooks Connection Diagnostic Tool is a great tool to solve network issues, data file damages and several other problems that commonly occur in QuickBooks. QB Diagnostic Tool works amazingly in a multi-user environment. You can easily detect the errors that will happen in the company files shared across the server. It is important to upgrade the tool to the latest version to avoid any security issues. The tool is available only for the QuickBooks versions for the ‘Windows’ and is not available for the MAC Versions.

What issues can QuickBooks Connection Diagnostic Tool resolve?
You can use QuickBooks Diagnostic Tool to rectify the below errors.

Access Denial to QuickBooks Database.
Poorly configured Windows firewall.
Various unexpected QuickBooks Errors:
Errors: ‘ -6150’, ‘ -6000, -82’, ‘-6000, -301’, ‘-6147’ and ‘-6103’.
The vendor list turned blank in your software.
All customer lists are empty.
Several entries in the ‘Employees lists’ are missing.
Multi-user errors such as Error code ‘H101, H303, H202, H505.
Damaged or corrupted files present in the system
QuickBooks files afflicted by a virus or are missing.
How to Download QuickBooks Connection Diagnostic Tool?
First of all, the first step you have to perform is click on the official link of the QuickBooks Connection Diagnostic Tool Download.
Secondly, you have to save the aforementioned file in your system.
Thirdly, you have to open the installer that has a name as “QBInstall_tool_vs.exe”
To proceed further, you have to shut down all the running programs which are running in your background.
Make a click on “QBInstall_tool_vs.exe” to begin the installation.
After installing it, you have to restart the program.
There is a proper recommendation for this software that you must have good internet in your system.
Now, clear all the applications running in the background.
Lastly, the software will eradicate all the errors which are generating in your system. Like this, you are able to alleviate all the errors which are related to QuickBooks.

Comments are off for this post

Where to buy Motor Insurance in UAE

Jan 21 2024 Published by admin under Uncategorized

Do you realize that according to the administration of UAE every single enrolled vehicle should necessarily convey Motor Insurance Policy. The autos and vehicles won’t just need to enlist, however they ought to be reestablished each year from that point alongside the acquisition of engine protection Policy. The Insurance Authority has ordered bound together engine protection arrangement as a base for all insurance agencies in UAE to be advertised. All the Best Motor Insurance organizations in UAE offer spread more extensive than the bound together engine protection strategy.

Sorts of Motor Insurance

There are two sorts of Motor Insurance in the UAE. Outsider Insurance and Comprehensive Insurance.

Following a mishap where you are to blame, you could wind up either harming any people on foot or travelers in different autos or wind up harming open property, other engine vehicles or property harm. This is Third Party Insurance (TPL) for you.

You can endure harm to your vehicle either because of your deficiency or the flaw of others. Thorough vehicle protection in the UAE will cover misfortune or harm to your vehicle and furthermore your outsider protection.

Rights that every citizen should know

Your safety net provider will remunerate you for shortfall or harm to your Motor Vehicle and its frill (standard extras gave at the hour of purchasing your vehicle), including harmed parts and extra parts because of a mishap, attempt at manslaughter, crash, toppling, fire, blast, sudden ignition, lightning, burglary, theft, any resolved demonstration by any outsider.

It isn’t only that, you will be glad to realize that regardless of whether your vehicle happens to be towed; your complete vehicle protection strategy will even now react. This incorporates in any event, during the stacking and emptying of your vehicle to tow.

Your thorough vehicle protection strategy will cover both all out misfortune and fractional misfortune to your vehicle.

It is safe to say that you are the main individual approved to drive under the bound together thorough vehicle protection arrangement in Dubai, UAE?

You are the approved individual to drive the vehicle yet you will be glad to note anyone holding a substantial driving permit gave in UAE can likewise drive your vehicle with your consent. Kudos!!!!! It’s not simply you, your loved ones can likewise drive in UAE.

Moreover, do you realize that if your driving permit has lapsed at the hour of the mishap, you will in any case be secured given you figure out how to recharge the permit inside thirty days? Don’t you call this pragmatic!!!!!

Where to purchase Online Insurance?

Do you realize that you can purchase online Comprehensive Car Insurance in Dubai, UAE just at www.insureatoasis.com? The main site in the UAE which accommodates you to think about and purchase your least expensive extensive vehicle protection strategy.

Every one of the arrangements sold at www.insureatoasis.com consent to the base brought together complete vehicle protection and substantially more!!

At www.insureatoasis.com; you can locate the top insurance agencies in UAE; like Orient Insurance, Oman Insurance, New India Assurance, Noor Takaful, Al Wathba National Insurance, Union Insurance, AXA Insurance, Qatar Insurance enabling a wise decision to look at vehicle protection items and think about vehicle protection cites.

What are you hanging tight for?

Visit www.insureatoasis.com promptly and investigate a wide scope of top insurance agencies in the UAE and a wide cluster of vehicle protection products!!!!! Try not to be astounded they likewise offer the least expensive Term Life Insurance on the planet separated from Home Insurance, Travel Insurance, Cash Back Insurance.

You can put your trust on InsureAtOasis to furnish you with the best and least expensive protection as they are the sole insurtech protection commercial center in UAE.

Comments are off for this post

Management Consulting – Skills Needed to Breakthrough in Management Consulting

Jul 08 2023 Published by admin under Uncategorized

Management consulting is the practice of helping organizations improve their overall performance by analyzing the problems they are facing and by developing action plans for improvement. This is one of the most lucrative fields in the business world today. If you want to start a career in management consulting and later on, succeed in this field, it’s imperative that you possess the following skills:

1. Listening skills. As a consultant, you’ll be expected to work closely with your clients. To easily understand their needs and demands, make sure that you listen to them intently especially when they are talking about the existing business problems. Take notes if needed and encourage your clients to go on details. It’s important that you get all the angles of the problem so you can offer the best solution.

2. People skills. If you hate working or meeting different people on a regular basis, management consulting might not be right for you. This endeavor will require you to mingle and collaborate with different individuals. Its better if you are comfortable having different company from time to time.

3. Confidence. As a consultant, you’re supposed to be someone who knows the ins and outs of the industry. Someone who can offer solutions or recommendations in a heartbeat. If you don’t want your clients to doubt your expertise, make sure that you project confidence each and every time. You must be certain on everything you say or do.

4. Problem-solving skills. Obviously, you need to have the capability to analyze and resolve problems being faced by your clients. You must have the ability to understand the pressing issues and you must know how and when to resolve them.

Comments are off for this post

Management Consultant – Understanding What Exactly Management Consultants Do

Jul 08 2023 Published by admin under Uncategorized

Management consultants are usually hired by organizations to improve their profitability and efficiency. Consultants are expected to identify the problems (and solve them) and sometimes they help in streamlining certain procedures to help their employers save some money from their day-to-day operation. Alternatively, their role maybe broadly defined and might include reorganizing a multinational corporation or giving expert advice in creating new jobs and eliminating some.

Management consultants are expected to be accomplished analysts in order to excel in this field. Also, they must be tactful communicators and great listeners. They must be able to think on their feet and they must have that convincing power to get people to change if it is needed.

Depending on the projects that they are handling, consultants may visit their employers’ site on a daily basis so they can get a feel on how the business is being run and so they’ll become more familiar with the existing processes. They maybe also asked to talk to management staff and their subordinates to get a clear picture of the problem or areas of opportunities.

There are no specific academic requirements for people who are aspiring to become management consultants. However, nearly all employers are leaning towards hiring those people who have at least a college degree in mathematics, business, computer science, economics, and logic. They also prefer those people who have already proven track record in this field and who have attended numerous relevant trainings. Obviously, these organizations will not settle for anything less as they would want to get great value for their money.

Comments are off for this post

How Do You Choose the Best Marketing Consultant?

Jul 08 2023 Published by admin under Uncategorized

In my life I have never attempted to repair an automobile. I have no facility for mechanics, no interest in fixing things and no curiosity about what makes engines tick. I have simply recognized my limitations as a backyard mechanic and take the wounded vehicle to professionals for proper care.

Most people are similarly limited in certain skill areas, while gifted in others, much like me. My career as a Marketing Consultant and Consumer Product Development specialist has introduced me to 1000′s of potential clients. Most have never undertaken the challenges inherent in Marketing a new product or service, or starting a new business. They often recognize that they need help, but they often need to ask: what is the best way to uncover the right consultant for a specific project?

Here are several tips for securing talent that will save your project time, mistakes and money when choosing a Marketing Consultant:

- Meet Face-to-Face
- Look at their work product, PR, past strategies, designs
- Ask about the products they have launched themselves
- Ask about patents they might have owned
- Only deal with specialist firms-if you have a consumer product, do not hire an agronomist or civil engineering consultant
- Have they won industry awards
- References are nice, but really, who gives bad references
- Quality Consultants are Fee Based, discover pertinent fees
- Make sure they will sign a Non-Disclosure Agreement (NDA)
- After signing the NDA, describe your concept, prototype, etc.
- What specific, off-the-cuff strategies does the consultant propose
- Do the strategies proposed seem cogent, offer fresh perspective

After conducting the above due diligence, repeat the process with at least two more candidates. Keep notes, even record the meetings. Do not allow any high pressure, walk if this occurs. Then collate your thoughts, confide in trusted advisers and weigh the best features of each firm. The choice will be most obvious in every case.

Geoff Ficke has been a serial entrepreneur for almost 50 years. As a small boy, earning his spending money doing odd jobs in the neighborhood, he learned the value of selling himself, offering service and value for money.

After putting himself through the University of Kentucky (B.A. Broadcast Journalism, 1969) and serving in the United States Marine Corp, Mr. Ficke commenced a career in the cosmetic industry. After rising to National Sales Manager for Vidal Sassoon Hair Care at age 28, he then launched a number of ventures, including Rubigo Cosmetics, Parfums Pierre Wulff Paris, Le Bain Couture and Fashion Fragrance.

Comments are off for this post

How to Know If Your Phone Campaign For Freelancing and Consulting Assignments is Working

Jul 08 2023 Published by admin under Uncategorized

I recently received an intriguing comment on my blog. It raised a question I’ve asked myself many times over the years, and I continue to fine-tune my answer.

First, an excerpt from the comment:

Based on call results, how do you know you’re either working with the wrong list or giving the wrong pitch? I’ve just started using your methods and have done only 20 calls. I left about 19 voicemails. I don’t know how many will call back. If I get one callback, or none, or a bunch-what does that tell me? Should I modify the pitch? Is 100 calls enough to know?

Three steps to success
Before I get into specific answers, let’s review the three steps of the Stand Up 8 Times system:

1. Go after assignments similar to your last good job
2. Approach the best prospects directly, most likely by phone
3. Get real! Define “quickly” as 30 days, not 30 minutes.

Going for the large numbers

For this system to be most successful, it depends on large numbers.

That’s because the system is proactive. You select people to call because they meet your criteria, not because you know that they need your service at this time.

You select the best person at the best company in your industry to call. But that in no way means that they hire freelancers or consultants to provide your service. And even if they do, it does not mean they need your service at this time.

The specific large number I recommend is 1,000. That’s right. Three zeros!

The way to accomplish this is to call 50 people per day for five business days per week for four weeks. In other words, it’s 20 days of calling. The system also works as an ongoing business builder, but the fewer calls per day, the slower the results.

In practice, I have never made this many calls. Work always kicked in long before I reached that number, at which time I modified my calling routine to fit it into my busy workload.

Still, when you extend your time horizon to 30 days, you inject an element of reality into your expectations. In fact, your results may well exceed your expectations.

It’s like when the airlines improve their odds for on-time arrival by extending the scheduled time slot for the flight.

The 1,000 number is for those who are highly motivated to earn money quickly. Alternatively, it is for those who are desperate. (The two situations can be pretty similar in real life.) Either way, it is a course of intense action to obtain paying results soon.

The two questions you should ask

Here are two better questions to ask in evaluating your efforts:

1. How long in calendar time will it take to get results?
2. What else would you do with your time to get work if you were not making these phone calls?

How long in calendar time will it take to get results?

We would like to think that potential hires are sitting at their desks shuffling papers until we call. When we suggest our services, they spring to action, relieved to find the answer to their prayers. So of course, they take our call. Unless they are not at their desk. In which case they call immediately after their 3 p.m. run to Starbucks.

Believe it or not, the people we call do not have returning our call as their top priority. A few are curious and will call back immediately. Some are interested, but having no need now, they file our names away without getting back to us. Some are out of the office for two weeks and won’t pick up our message until the following week. Some may refer us to others who need our services without letting us know. (Yes, it has happened to me. The person I was referred to called about a year and a half later.)

The first days of phoning are the most frustrating. You mostly talk to voice mail and no one calls back. Several days into the process, you start to get a few callbacks, soothing your fears that your calls are not landing with anyone at all.

So it takes days or even weeks to get positive responses, regardless of how many calls you make on Day 1.

What else would you do with your time to get work if you were not making these phone calls?

If you have something more effective in mind, take a break from phoning and try it out.

Or are you considering any of the following?

Giving up on freelancing / consulting and getting a “real” job. If you hate marketing of any sort, this may be just right for you. Face it. Freelancing and consulting will require eternal marketing. Or until you retire. Whichever comes first.

But what if you are trying to freelance because you can’t get a job? Giving up on freelancing / consulting doesn’t automatically solve your employment problem.

Instead, if you want a regular job, keep applying while you phone. There’s no conflict between the two.

Networking, either in person or online through Twitter, Facebook, LinkedIn, etc.

I assume that if you have started on any of these or similar services, you’ve already used these channels to publicize your freelancing / consulting. Maybe not for hours every day, but you have emailed family and friends and posted update notes to your online profiles, haven’t you?

These channels are built on know, like and trust. They’ll take much longer than 30 days to generate income, most likely.

And if you are going to switch over totally to these channels, what are you going to do differently to get business and convert social connections into paying assignments?

Watch TV?

Many people have taken this route. I confess, I’ve done it too.

My favorite diversion is America’s Next Top Model marathons. What’s yours?

The days will pass whether you phone or not. If you don’t have a more effective marketing technique, stay with the phoning.

Now let’s back up to the original question:

How do you know you’re either working with the wrong list or giving the wrong pitch?

You know if you are working with the wrong list or giving the wrong pitch because you are going after assignments similar to your last good job. You don’t have to talk to prospects to determine their needs because you have spent years toiling in their industries and in their functional areas.

You already know what they need and how they perceive their problems and what keeps them up at night. Sit back and remember what your boss used to complain about over coffee. What he or she requested more of in performance reviews and annual objective-writing sessions.

The voice mail messages you leave and to which no one has responded teach you nothing. Unless you are a mind reader.

There are a few people who will talk to you but do not need your services. Because this number is small and because they have talked to you, it is very possible to put too much credence in what they tell you and overly rely on it. And since their answer contains a “no” or at least a “not now,” it is easy to become unreasonably discouraged.

They may say they don’t need you because they do the work themselves. Or they laid people off so why would they hire a freelancer. Or they have no business coming in. Or they can’t spend the money.

However, the next person you phone may hire you because they are too busy doing the work themselves. Or they need a freelancer because they had to let their employees go. Or they want to expand their marketing, product development, etc. to generate more business. Or they have to spend the money because they have an intense need for your services.

You will get assignments, or at least questions about services they may need within a few months. This is the input that most helps you shape future marketing.

I know, kind of frustrating that you don’t get the input you need until you get assignments that somewhat relieve the intensity of your questions. That’s life.

Comments are off for this post

How to Sell Consulting – Revealed – 5 Top Steps to Accelerate Your Consulting Sales

Jul 08 2023 Published by admin under Uncategorized

Sometimes businesses have very specific problems. When they have these particular problems they look for experts to solve those problems. Those experts are called consultants. As a consultant, while you continue to promote your business, there are already people looking for knowledge you know that will help them solve their particular problems. When you share this knowledge you increase profits. Revealed – 5 top steps to accelerate your consulting sales.

1. Make your ex-boss your customer. Your ex-boss already knows your capability levels. Perhaps you could convince him or her to outsource some work to you using your skills that can benefit them.

2. Volunteer in the community using your consulting skills. This is an easy way to connect with people who can perhaps be a future prospect for customer. When you volunteer in some community event using your business skills, amazing things can happen.

3. Offered to conduct a community education class. This is a good way to get publicity through the community college or facility sponsors a community education classes. They often publish catalogues to thousands of homes and businesses in your community. This stays you hundreds or even thousands of dollars in advertising costs because your name is in the catalog.

4. Be approachable. People like to work with business people that are down to earth and easy to work with.

5. Create a marketing plan and follow that plan. As you create a reasonable marketing plan for yourself to promote your business, you can see which sales approaches benefit you the most in increasing your consulting sales.

Comments are off for this post

Your Roadmap to Success

Jun 05 2023 Published by admin under Uncategorized

No matter what kind of business you have — whether you sell products or a service online, from a home office or a traditional bricks and mortar store, as the saying goes, “if you fail to plan, then you’re really planning to fail.”

On a scale of one to ten,Guest Posting having a good business strategy rates about a fifteen!

Creating a strategy can mean the difference between you working 60 to 80 hours a week all year long — and then breaking even, or worse, losing money.

A plan is your roadmap; you would rarely take a road trip with no plan on how to get there or where you wanted to end up (except for those romantic ideals of jumping in a car and taking off anywhere ahh…)

I have worked with many businesses and in many industries through my time in consulting and there are usually two categories-:

(1) No Plan

With no plan and no structure these businesses never end up going anywhere quickly and chase themselves around and around in circles. (No Chance of taking themselves on the road to anywhere at anytime they feel)

(2) With a Plan
On the other hand, many successful entrepreneurs who have a strategy work fewer hours and make piles of money — and they usually attribute their success to having a strategic plan and following it. (The ability to take off and follow their hearts on one of those romanticised road trips)

So what is strategic business management? Very simply, it’s the process of defining the goals and objectives for your business, creating an action plan so you can reach them and then following the plan in a nutshell a strategic business plan.

So how do you create a strategic business plan for you business?

1. Know what your vision for your company is. If there were no barriers, nothing stopping you from taking your company as far as you could — what would that look like? THINK BIG, this is your dream, your vision!

2. What are your company’s core values? What are its guiding principles? What is your culture? In other words, why are you in business and how do you do business?

3. Create a 3 to 5 year plan. Your long-term plan is based on the broad objectives that will help you get from where you are now, to where you want to be.

4. Develop a plan for this year. These are the specific objectives you plan to accomplish this year that will lead you closer to your long-term goals. Remember to be “SMART” when setting your annual goals (Specific, Measurable, Attainable, Realistic, and Time-Oriented). Include a list of the barriers that are stopping you from getting where you want to go. Figure out what resources you’ve already got, and what resources you need to get you past those barriers. Then create an action plan that clearly lays out how you will achieve your goals. Involve key employees with this part of the planning process.

5. Create a set of milestones or benchmarks. This is very important, so that you can measure your progress. If you can’t measure it you can’t manage it and you won’t know if you have achieved your desired outcomes.

6. Share the plan with your employees, and anyone else who will be involved in the process. Your annual strategy is the roadmap that will make sure everyone ends up at the same destination — but to be effective, everyone needs the same map!

7. Put the plan into action. Now that you have the roadmap, it’s time to begin the journey.

8. Check your progress. Just like any trip, you need to check the map every now and then; to be sure you’re still on the right road. If something isn’t working, the sooner you figure it out and make the necessary adjustments, the sooner you’ll be back on track. Strategic Business Plans should be well loved not a nice to have done and beautifully bounded on the shelf never to be looked at again.

9. Follow the same cycle next year. (Dream, Plan, Act, Check).

Creating a business strategy and following it will ensure that you enjoy the journey as much as getting to your final destination.

Comments are off for this post

Top 10 Uses of Life Insurance in a Family Business Succession Plan

Jun 05 2023 Published by admin under Uncategorized

Most family business owners want to keep the family business in the family. This article addresses how life insurance plays an important role in business succession planning.

A key part of estate planning for business owners who want to keep their business in the family is deciding when and to whom to transfer the business. The particular tools and techniques used in a business succession plan will vary based on the goals and objectives of the four groups affected by the plan: the senior generation business owner,Guest Posting the junior generation family members involved in the business, key non-family employees, and family members not involved in the business. It is important to examine how life insurance plays an essential role in the typical family business succession plan.

1. Estate Liquidity

While there is a present lapse in the estate and generation-skipping transfer taxes, it’s likely that Congress will reinstate both taxes (perhaps even retroactively) some time during 2010. If not, on January 1, 2011, the estate tax exemption (which was $3.5 million in 2009) becomes $1 million, and the top estate tax rate (which was 45% in 2009) becomes 55%. However, it is the author’s opinion that the estate tax exemption will be at least $3.5 million once Congress acts.

Some business owners will wait until death to transfer all or most of their business interests to one or more of their children. If the business owner has a taxable estate, life insurance can provide the recipients of the business with the cash necessary to pay estate taxes. Using life insurance to pay estate taxes is particularly useful for business owners because their ownership interests cannot be readily liquidated. The children receiving the business may also need life insurance to pay estate taxes. Usually, the insurance policy will be owned by an irrevocable life insurance trust so that the beneficiaries will receive the death proceeds both income and estate tax-free.

2. Buy-Sell Agreements

A properly designed buy-sell agreement guarantees a market and fair price for a deceased, disabled or withdrawing owner’s business interest. It also ensures control over the business by the surviving or remaining owners and can set the value of the business interest for estate tax purposes. Life insurance is the best way to provide the cash necessary for the business or the surviving owners to purchase a deceased owner’s interest. In many instances, the cash surrender value in a life insurance policy can also be used (tax-free) to help pay for a lifetime purchase of a business owner’s interest.

3. Estate Equalization

A business owner can use life insurance to provide the children who are not involved with the business with “equitable” treatment. Leaving the business to the active children and life insurance to the inactive children equalizes the inheritances among them. In addition, it avoids the need for the active children to purchase the interests of the inactive children, perhaps at a time when the business may be unable to afford it. Depending on the particular facts and circumstances, the insurance may be owned by an irrevocable trust for the benefit of the inactive children, and the insured may be the business owner or the business owner and his or her spouse.

4. Nonqualified Deferred Compensation Plans

A nonqualified deferred compensation (NQDC) plan can be used by a small business to provide members of the senior generation with death, disability, and retirement benefits. A NQDC plan may be particularly useful in situations where the senior members have transitioned the business to the junior members and are no longer receiving compensation. A NQDC plan also ensures that key employees remain with the business during the transition period — a so-called “golden handcuff.” Because life insurance offers tax-deferred cash value growth and tax-free death benefits, it is the most popular vehicle for “informally” funding NQDC plan liabilities.

5. Key-Person Insurance

Many family businesses depend on non-family employees for the company’s continued success. To guard against financial loss due to the absence of a key employee, and to ensure that the business stays in the family, many companies take out “key-person” life insurance, disability insurance, or both.

6. Section 303 Redemptions

Internal Revenue Code Section 303 enables the estate of a business owner to remove cash from a corporation with no tax cost. To be eligible for a Section 303 redemption, the stock’s value must exceed 35% of the shareholder’s estate. Also, the maximum amount that can be redeemed is limited to the amount of the federal estate tax, state death taxes, funeral, and administrative expenses. The corporation can purchase a life insurance policy on the shareholder’s life to ensure that the corporation has sufficient funds with which to accomplish the Section 303 redemption.

7. GRATs

With a Grantor Retained Annuity Trust (GRAT), the grantor transfers a business interest to the child or children active in the business (the “remaindermen”), while retaining the right to receive a fixed annuity from the trust for a stated term of years. The longer the stated term and the larger the annuity, the smaller the taxable gift. At the end of the stated term, the balance of the trust property passes (gift-tax-free) to the remaindermen. The risk with a GRAT is that if the grantor dies during the stated term, all of the assets in the GRAT are included in the grantor’s estate for federal estate tax purposes. But, in such case, by funding an irrevocable life insurance trust for the benefit of the GRAT’s remaindermen, the grantor can leave the business interest to the GRAT’s remaindermen who can then use the life insurance proceeds to pay the federal estate taxes due. Alternatively, a married grantor might qualify the assets in the GRAT for the marital deduction and have an ILIT (for the benefit of the GRAT’s remaindermen) use the life insurance proceeds to purchase the assets from the grantor’s estate.

8. Asset Protection Planning

Businesses assuming the risk of potential environmental contamination (i.e., waste hauling, landfills, chemicals, etc.) are subject to liability under federal and state pollution laws. Moreover, such liability is not limited to the business itself, as the business owners also may he personally liable under such laws. As the business passes to the next generation, so does the potential liability. Life insurance is ideal in this situation. The business owner can establish an irrevocable life insurance trust to run for the maximum period permitted by state law (i.e., at least 90 years in most states and in perpetuity in a handful of states). The trust would provide the business owner’s descendants with income and principal as needed for health, education, maintenance and support. If properly structured, the assets in the trust cannot be reached by the beneficiaries’ creditors, including state and federal environmental agencies.

9. Private Annuities and SCINs

With a private annuity, the business owner (the annuitant) sells the business interest to the child or children active in the business (the purchaser) for an unsecured promise to make periodic payments to the business owner for the rest of his/her life (a single life annuity) or for the life of the business owner and his or her spouse (a joint and survivor annuity). Because the private annuity is a sale and not a gift, it allows the business owner to remove the business interest from his or her estate without incurring gift or estate tax. The child or children purchasing the business interest can fund an irrevocable life insurance trust for his/her/their family’s benefit in order to have the cash to continue to pay the annuity should he/she/they predecease the business owner. Conversely, the business owner can fund an irrevocable life insurance trust for his/her family’s benefit as a hedge against the business owner’s premature death. In either case, the amount of life insurance needed would be based on the present value of the future annuity payments.

When a business owner decides to sell the business to a child in installments, the promissory note may be a self-canceling installment note (SCIN). With a SCIN, upon the seller’s death, all remaining payments under the note are canceled, similar to a private annuity. The purchaser must pay a “premium” for this cancellation feature, either by a higher interest rate or a higher purchase price. Like a private annuity, a SCIN avoids estate and gift taxes. Unlike a private annuity, a SCIN allows the seller a security interest in the transferred business. When using a SCIN, just as with a private annuity, the business owner can fund an irrevocable life insurance trust for his or her family’s benefit as protection against the business owner’s premature death. Conversely, the purchaser can fund an irrevocable life insurance trust for the benefit of his/her family so that they will have the cash to continue to pay the SCIN should the purchaser predecease the seller.

10. Family Bank

When the decision is made to leave the business to both active and inactive children, it is usually advisable to leave only the active children with voting interests in the business. In addition, “put” and “call” agreements should be entered into. Usually, a put option requires the business to purchase all or a portion of the inactive children’s interest in the business upon a set price and terms. Without a put option, there may be no practical way for an inactive child to benefit from owning the business interest unless the business is sold. On the other hand, a call option allows the active children (or the business itself) to purchase the business interests of the inactive children upon a set price and terms. Without a call option, there may be no effective way for the active children to avoid conflicts that can occur between the active children who are receiving salaries and bonuses, and the inactive children who are not. By having the active children own life insurance on a senior family member’s life, a “bank” is created to provide the funds to satisfy any such puts and calls. Usually, the policy will be owned outside of the business entity, such as in a trust for the benefit of the active children, or by a limited liability company owned by the active children.

Succession planning seeks to help a business owner confronting many issues. There is no “one size fits all” approach to keeping the family business in the family. The tools and techniques best suited to a particular business are fact-specific. Life insurance plays an important role in helping a business survive and thrive as it moves from one generation to the next.

Comments are off for this post

Older posts »