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Bowing Out Gracefully
How to Set Up an Effective Exit Strategy
By Robert W. Swan, CPA, CVA
Retiring may not be an easy prospect for business owners who have spent their lives building a business. Many lack company-sponsored pension plans and most of their money is tied up in the business. If you are facing this situation, now is the time to start developing an exit strategy.
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Assessing Your Needs
The first step in creating an exit strategy involves assessing your needs. Some important questions include the following:
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Have you identified a family member or trusted manager to take over when you retire? If not, you may want to consider selling your business to maximize value and avoid a crisis.
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Have you planned for estate taxes? If you don't have the liquidity necessary to cover your estate tax liabilities, consider buying life insurance or creating a gifting program.
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Will other factors, such as relationships with other shareholders or changing market conditions, play a role in the future of your business? Disagreements with other shareholders or risky market conditions may dictate the type of plan with which you feel most comfortable.
Cashing Out
Unlike people whose investment portfolios are diversified in many different stocks and bonds, business owners tend to have invested the majority of their funds in one thing — their own businesses. This makes cashing out when they are ready to retire much more difficult.
An exit strategy involves developing a plan for passing on responsibility for running the company, transferring ownership and extracting the owner's equity. Since a stable business is worth more than an unstable one, creating a seamless transition is essential to maximize the owner's investment.
Click here to read this complete article and learn how to develop an exit strategy for your business!
Robert W. Swan is the Partner-in-Charge of the Evansville, Indiana office of Kemper CPA Group LLP and a CPA licensed in Indiana. Bob brings a unique blend of tax, accounting and valuation experience to your business, and has been certified to perform business valuations by the
National Association of Certified Valuation Analysts (NACVAŽ). Bob can help you with your exit planning needs – bringing to your office, factory or store his considerable knowledge and business experience. You can reach Bob via telephone at (812) 421-8000 or by e-mail at rswan@kcpag.com.
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Prevent Theft/Loss at your Jobsite – and Save Money!
Did you know that contractors lose millions each year as a result of theft and vandalism of equipment and materials at job sites? The impact of these losses touches all in the industry through higher insurance premiums and lost profits due to the indirect costs of such losses.
Most insurance policies covering construction equipment have a $1,000 (or more) deductible, which must be paid by the contractor when a claim is filed. If a contractor has a 5% profit margin, a $20,000 contract price is needed to pay for that $1,000 loss. There are steps, however, that contractors can take to protect their investments and
profits, through improvements in security and simple techniques for deterring theft and vandalism.
Improving Jobsite Security
The Associated General Contractors of America offers some tips for reducing worksite theft and vandalism. While some are obvious, they are often overlooked – the following list suggests some ways to make it more difficult for would-be thieves to steal from your jobsite: |
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Most insurance policies covering construction equipment have a $1,000 (or more) deductible, which must be paid by the contractor when a claim is filed.
If a contractor has a 5% profit margin, a $20,000 contract price is needed to pay for that $1,000 loss.
There are steps, however, that contractors can take
to protect their investments and profits, through improvements in security and simple techniques for deterring theft and vandalism. |
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Remove keys from unattended equipment – and keep the keys secured
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Alarm major pieces of equipment and keep any deactivation codes well secured
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Keep all storage areas well-lit
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Use an anti-climb fence
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Ask the police to make frequent area checks when the site is closed
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Take photos of your equipment and keep an accurate inventory
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Develop a jobsite security plan and assign security responsibilities
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Use fuel locks
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Paint the tops of your equipment a distinctive color – a "stamp" of ownership
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Record a dog barking and hook the recording to a motion detector
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Put employee parking outside of the jobsite, to help reduce the possibility of theft of tools and small equipment that fits easily into a car trunk or truck bed
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Mark equipment in two places (one that is apparent and one that is hidden) and record those numbers on an inventory control list
Taking steps to reduce theft at your jobsite will help reduce insurance claims and costs over the long term. Kemper CPA Group LLP is ready to meet your needs for business or personal financial consulting; if you have any questions,
give us a call or send an e-mail to KemperCPA@charter.net!
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Microsoft Small Business Server 2003 Overview
By Thomas Swinford, Kemper Technology Consulting – Evansville
Microsoft's most recent Small Business Server (SBS) 2003 release targets the needs of today's small-business market. Designed for businesses with 75 or fewer workstations or users, SBS 2003 is the fourth generation of Microsoft's SBS product line, and it boasts simpler installation, configuration, and management than any previous SBS version.
Unlike earlier versions, SBS 2003 comes in two versions: SBS 2003 Standard Edition and SBS 2003 Premium Edition. The table below lists the components of each edition.
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Premium
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| Windows 2003 |
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| Exchange Server 2003 |
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| Microsoft Office Outlook 2003 |
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| SQL Server 2000 |
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| Windows SharePoint Services |
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| Shared Fax Service |
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| RRAS |
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| Microsoft Internet Security and Acceleration (ISA) Server 2000 |
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| Microsoft Office FrontPage 2003 |
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Both versions of SBS 2003 include Windows Server 2003 (with its integrated Microsoft Windows SharePoint Services feature), Microsoft Exchange Server 2003, Microsoft Office Outlook 2003, and five Client Access Licenses (CALs). To this base of core components, SBS 2003 Premium Edition adds Microsoft SQL Server 2000 Service Pack 3, Microsoft FrontPage 2003 and Microsoft
Internet Security and Acceleration (ISA) Server 2000.
Click here to read the entire article discussing the features and benefits of the new SBS 2003 release from Microsoft. For professional assistance with choosing the right software for your business or organization,
contact the knowledgeable professionals at Kemper Technology Consulting!
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Gifts to Minors
 Looking for a way to give your child or grandchild money for college or some other endeavor and meet your own financial and estate planning objectives? Consider these strategies for making gifts to
minors.
Outright Gifts
You can transfer cash, property, stock, or mutual fund shares directly to the child. Each year, married couples can give a child up to $22,000 gift-tax free ($11,000 if you're single). Any income earned from the gift is taxed to the child. And the gift property – and any later appreciation in value – is removed from your taxable estate. While this method is simple,
as a minor, the child may not be able to make certain transactions with the gift.
Custodial Accounts
You can set up an account at a financial institution under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA). As with outright gifts, married couples can contribute up to $22,000 gift-tax free annually, and earnings are taxed to the child. If the child is under age 14, income above $1,600 (estimated 2004 limit) is taxed
at the parents' rate (due to the tax law's "kiddie tax" rules). The biggest disadvantage of a custodial account is that the child assumes control of the account at age 18 (21 in some states) and, at that point, can use the assets for any purpose he or she wishes.
Trusts
Often, trusts are expensive to set up, but they offer a lot of flexibility. The trustee you choose will have control over investments and distributions in accordance with the trust's terms. If you desire, the trust can be structured to take advantage of the gift-tax annual exclusion. Earnings are taxed, though generally to the trust or the beneficiary instead of to
the donor. Planning can minimize the tax effects.
For additional information regarding managing your finances and investments, click here to view the January/February 2004 issue of Kemper Capital Management's online newsletter Loose Change! This informative newsletter provides a wealth of "plain English"
articles that will help you plan to meet your personal and business financial goals!
If after reading the newsletter you have any questions, contact the friendly professionals at Kemper Capital Management today to schedule an appointment to discuss your investing needs!
Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities offered through CapPro Brokerage Services, Inc., member NASD & SIPC. Insurance services offered through KCPAG Insurance Services LLC.
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