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Business Planning for 2011


With the start of a new tax year and the economy now in recovery mode, this is the best time to update the strategy for your business.  Too often business people wait until late in the year to do their planning.  While there are some actions that can be taken at that point, those who work proactively throughout the year implementing business and tax strategies fare far better than those who put planning off to the last minute.  There are plenty of items and tax planning that should be attended to throughout the year.  Lets look at some of the basic concepts.

Business Operations

According to the National Bureau of Economic Research (NBER), the economy is now in recovery.  While it still feels like a harsh recession, hiring has improved and many publications, including the federal Beige Book, give reason to find optimism.  Now is the time that businesses should work hard to increase revenue and look to hire additional staff.  Lately, the trend has been that American businesses hire temporary staff ahead of hiring full time employees; so start now to look at your labor needs and hire temporary staff that can become full time employees as the demand increases.  Business is predicted to pick up in the near future; it is therefore the appropriate time to ramp up man power.


Even though the country’s economy is now recovering, some lingering benefits of the recession are still around.  Instinctively, businesses tend to cut investments when business is slow.  Ordinarily, this response to the business stimuli would be appropriate. However, given increased Internal Revenue Code section 179 expense deductions and manufacturer’s incentives to purchase more investments like trucks, equipment, and even buildings, economic down turns tend to be excellent times to increase investments in business property, especially if the investments will create more efficiency in operations.  The superior financing and tax incentives during an economic downturn, and now subsequent recovery, are and usually do outweigh any benefit through saving money by cutting back on needed investments.  Further, if you do not reinvest now, you may have to reinvest later, when the tax and manufacturer’s incentives are not as good as they are today.


The economic down turn has also brought with it lower financing rates that are currently remaining in the recovery.  The financing on buildings and equipment may be eligible for lower refinancing rates.  Check with your bank to see if your current loans can be refinanced and determine what the rates are if you do purchase equipment and need financing.  Just be sure to check the fees and costs before committing to any refinancing.

Estate Planning

Many business people have complex estates.  Along with the complexity, the average net worth of a business person is substantially higher than an employee.  On its current course, Congress has raised the estate tax exemption; if your estate is close to the new level, you need to consider estate planning.  Now with the changes in housing values, the potential increase in business value, individually owned retirement accounts and other sources of wealth, an average business person’s estate may very easily be over the maximum amount of the current or future tax exclusion amount.  It is best to begin estate planning early in the year so issues can be resolved throughout the year and the estate plan can have time to operate during the year.  Please review your total estate value and start the process of a complete estate planning process now.

Succession Planning

Along with estate planning, comes business succession planning for those who own businesses.  Business succession planning is not as simple as drafting a will.  Business succession planning, when done properly, provides a smooth transition for the succeeding generation.  The process includes the valuation of the business and the creation of legal documents, such as a buy/sell agreement (the most important legal document a business owner can have.)  When succession planning is not done or is done improperly, it usually means the loss of the business and therefore the loss of your lifetime of hard work. Don’t procrastinate, start the process now!


Beyond the items discussed above, there is plenty that can be done to improve your financial and tax situation throughout the year.  Too often people approach financial, tax, and business planning as an after-thought of running the operations of their business.  Operating a business in this manner does not afford the business person an opportunity to see the bigger picture.  Running a business without a plan to exit and retire is similar to driving a vehicle with no destination in mind.   Proper planning and implementation of an exit, succession and tax strategy allows you to keep more of your hard earned cash and allows you to have a better retirement when the time comes.  If you are not sure where to start or how to start, please contact the experts at the Center to assist you in your exit, succession and tax planning strategies.

By: Dr. Bart Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors