* * *
"The Small Business Professor is a site that should be bookmarked by every entrepreneur. In today's business environment, it is difficult to gather information and obtain answers to the myriad of questions that face business owners. Bruce Freeman's 'Ask the Small Business Professor' column is an excellent resource that provides guidance, up-to-the-minute information, mentoring, and more."
"'Ask the Small Business Professor' is a must read for small business owners looking for free expert business advice. Using a Q&A format, Bruce Freeman covers important small business topics weekly by bringing in recognized experts on subjects including accounting, legal issues, trademarks marketing and sales. Don't miss it!"
"Bruce Freeman, The Small Business Professor, is a most valued and enthusiastic guest contributor to the business segment of our radio show dealing with the challenges facing today's entrepreneurs. His practical and insightful advice has served to enhance our ability, as broadcasters, to help business owners move ahead in their various fields of endeavor. ....Thank you, Bruce."
"I've been working with patients for almost 10 years as a Chiropractic Physician. I'm always looking for new ways to increase awareness of the valuable clinical services provided at my centers. Bruce Freeman has given me insightful ideas to assist in my marketing efforts. I rely on his 'Ask the Small Business Professor' column to keep me abreast of new trends and developments in the field. I couldn't ask for a more knowledgeable and capable advisor as my companies move forward into providing nationwide healthcare for patients."
"I find the column inspiring and helpful to me in running my own small business."
Retiremement & Assets
Dear Professor Bruce:
I have a furniture repair business. I am reaching retirement and have two children. One of my children works in the business with me and the other does not. I want them to share equally in the profits of the business, but I also want my child who is in the business with me to manage the business without her brother interfering. What can I do?
Essentially, you want to separate ownership of your business into "management" and "profits". This is not an unusual situation, especially in such circumstances.
Attorney Marc S. Bekerman offers some excellent advice:
The first step is to determine how your business is established legally. This can be done by reviewing your most recent income tax returns or asking your accountant if you have one. Many small businesses operate as a sole proprietorship since this is usually the easiest and least expensive method. If you are unsure, it is likely this is how your business is structured (but this should be confirmed before proceeding).
There are many limitations as a sole proprietorship and it is not really suitable for your situation. Instead, you should create either a corporation or a limited liability company for the business. In addition to addressing your management issue, there are other reasons to use these entities (including protecting the owners of the business from personal liability for the debts of the business).
If the business is a limited liability company, your state law may permit a manager to run the business apart from the owners. This is usually done either when creating the limited liability company or by an agreement among the owners. If the business is a corporation, it could issue two separate types of stock (one for the management rights and the other for the profit rights). Either way, the business could enter into a long-term management agreement with the child who will manage the company. I also recommend that you consider speaking with your children regarding your intent as the child who will not be involved in management may respect the decision more if you explain it to him.
Finally, you may want to consider the use of trusts to hold the business for the benefit of your children. With a trust, the trustee would own the company and would receive the company's profits, which would then distribute to the trust's beneficiaries. Use of a trust may be more complicated, but it can also accomplish many goals if done properly.
However you proceed, it is important to have good advisors to assist you.
For further information, please visit www.bekermanlaw.com.
Many small businesses operate as a sole proprietorship since this is usually the easiest and least expensive method.