Already on ArticleSlash?

Forgot your password? Sign Up

Business Life Insurance Part V - Sole Proprietorships - Pre Arrange Sale of Business

 


Visitors: 149

If there is no history of family ownership and family goodwill exists. The best way is to sale the business by prearranged sale funded buy-sell agreement will guarantee the asset value if an employee(s) has shown the interest and the ability to continue the business. Upon completion of the agreement, life insurance should be purchased to fund the agreed upon purchase price.
The buy sale agreement between the owner and employees can also be funded by a split-dollar agreement. At death, this agreement provides funds for the buy-sell agreement . At retirement prior to death, the cash surrender value can help provide retirement funds.

The buy sale agreement of this kind is the best solution for sole proprietorship, because of the following factors:

1. A qualified buyer for the business is established and the proprietor is assured that the family will receive a fair price for the business

2. The business is stabilized. Customers, suppliers and creditors, aware that plans have been implemented for the orderly continuation of the business proprietor.

3. All employees will be retained. Rather than eventually starting a competitive business and the employee will be eager to do a better job for the present employer.

The employer-employee buy-sell agreement can be advantageous to the estate and heirs:

1. The estate receives full value for the business immediately and settles promptly and efficiently

2. The family is relieved of business worries.

There are also many benefits to the employees:

1. No fear of job loss upon owner's death and guaranteed funds to purchase the business at exactly the needed time.

2. Removal of the burden of principle payments and interest payments typical of all other forms of financing.

3. Do not have to contend with interference from executors who must be chiefly concerned with protecting the interest of the beneficiaries.

I hope this information will help. If you need more information of the above subject, please visit my web page at:

Kyle J. Norton
http://medicaladvisorjournals.blogspot.com/
http://businessinsuranceii.blogspot.com

All rights reserved. Any reproducing of this article must have all the links intact.

I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990

(395)

Article Source:


 
Rate this Article: 
 
Avoiding Costly Small Business Mistakes As a Sole Proprietor
Rated 4 / 5
based on 5 votes
ArticleSlash

Related Articles:

Business Insurance Part III - Sole Proprietorships - The Advantage of Buy-Sell ..

by: Kyle J Norton (September 18, 2008) 
(Insurance/Commercial)

Business Insurance Part II - The Advantage & Disadvantage of a Sole ..

by: Kyle J Norton (September 18, 2008) 
(Insurance/Commercial)

Business Insurance Life Part VII - Business Partnerships - Disposition of ..

by: Kyle J Norton (September 19, 2008) 
(Insurance/Life Annuities)

Guide To Sole Proprietorships

by: Richard Chapo (February 05, 2007) 
(Legal)

Business Life Insurance Part VI - What Are Business Partnerships and Their ..

by: Kyle J Norton (September 19, 2008) 
(Insurance/Life Annuities)

Business Insurance Part I - How to Protect Your Business

by: Kyle J Norton (September 15, 2008) 
(Insurance/Commercial)

Small Business and Sole Proprietorship

by: Jon Elton (March 27, 2008) 
(Business/Small Business)

Running a Business As a Sole Trader

by: Nazir Daud (June 17, 2008) 
(Business/Small Business)

Why the Sole Proprietor Should Form an LLC Business

by: Amy McDaniel (June 19, 2008) 
(Legal/Corporations LLC)

Avoiding Costly Small Business Mistakes As a Sole Proprietor

by: Beckie Leone (June 24, 2008) 
(Business/Small Business)