Many small businesses share three common issues that can rob the owner of a good night’s sleep. But a bit of business planning with a financial professional can go a long way to help you regain control of your sleepless nights.
Planning for business continuation
Planning for continuation of ownership in the event of retirement, disability or death is perhaps the fundamental need of any closely held business, especially one that has more than one owner.
Solution: Most small business owners that plan for the transition of ownership use a buy-sell agreement that specifies the terms of buying out the interest of a disabled or deceased owner, usually with disability income insurance or life insurance, which provides a means for financing the buyout.
Protecting the operating team of the business
Every successful business has at least one key employee or contributor who is indispensable. What if that person died unexpectedly?
Solution: Life insurance can be used to protect against the financial costs associated with the loss of a key employee. Key person life insurance helps provide liquidity to sustain cash flow, keep accounts current, and cover the expense of seeking and training a replacement.
Recruiting, retaining, and rewarding key employees
It is tough to attract talented employees. The best people have many choices for employment and can command their desired compensation package.
Solution: Benefits such as an executive bonus plan, split-dollar plan, and supplemental executive retirement plan (SERP) are non-qualified fringe benefits that can be funded with life insurance to reward outstanding, key employees beyond their regular compensation.
There’s no better time to start planning for your small business! Talk with your AuguStar financial professional to get started.
This material provides general information that is designed to be educational in nature and is not intended as specific tax or legal advice to any particular individual nor the law of any particular state. Please seek the advice of a qualified tax or legal professional for your specific situation.
Products are issued by AuguStar Life Insurance Company and AuguStar Life Assurance Corporation. Product, product features and rider availability vary by state. Issuer not licensed to conduct business in NY.