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Tax Blog

Time: The Biggest Issue for Small Business

The estate tax is colloquially called the “death” tax. It is a tax imposed on estates containing $5.49 million and up for single people and 10.98 million for married couples, for which the credit is portable on to each other.

A certain politician (or rather many) have said that the “death” tax hurts small businesses and farms. While this is politically lush for any politician to say so, it is not particularly correct. What we have found and studies indicate is that taxes are rarely an issue for small business with even the smallest amount of planning for estate taxes.

In fact, if you look at Wisconsin, approximately 50,000 residents die there each year. According to the IRS, in 2015 sixty-one estates were affected by the federal estate tax. One-tenth of a percent isn’t much.

What tends to be bigger problem, much bigger, is not the “death tax”, but time and lack of planning together. This is true throughout all the states. What we have found is that most bigger businesses subject to the tax, plan for the estate tax. In doing so, they also plan for owner and business succession transitioning, making these businesses more likely to survive the next step, in fact.

On the other hand many small business owners assume that when they pass away “someone” will pick up the pieces. Picking up the pieces and carrying on successfully is typically not the case. Many times when an owner has something happen to them, the business goes down with them for a variety of reasons that were not planned for. Examples include lack of leadership, lack of capital, lack of interest, family infighting, confusion, the trauma alone associated with the loss of their key employee, and the list goes on. In fact it is such a problem many industries such as the material handling industry and farm equipment dealers demand that their dealers and suppliers have succession plans in place and they review those plans periodically. We would recommend that any business, subject to the estate tax or not, have a business succession plan in place today written by an individual in the know such as an attorney and reviewed by a CPA.

We do not pick a side for political debate here at The Center. To us, our job is to educate and inform. We find the bigger problem over the estate tax to be the lack of business succession planning itself. Don’t let your business become a victim of a simple lack of planning… and time.

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