Saving the Florida Small Business During COVID-19
Since March 2020, COVID-19 has kept much of America on lock-down. With ups and downs along the way, small family-owned businesses have struggled to stay open, while complying with rapidly evolving rules and local mandates. Florida has been a hotspot at times, with higher than normal infection rates, leading to a lot of concerns about extended harm to businesses and the likelihood of the shutdown lasting indefinitely. At The Sejour-Gustave Law Firm PLLC, our attorneys remain devoted to protecting and preserving small businesses in our region, even in these difficult times.
Planning for Business Succession
Succession planning is always a concern for small and family-owned businesses. Nothing is better than building a great business and handing it off to one’s children later in life. But in the age of COVID-19, there are some extra considerations. For instance, when transferring a business, one must think about business valuation. As Family Business explained recently, it may be a terrific time to begin gifting money and other valuable assets to children. Even if this seems counterintuitive right now, there are good reasons why affluent families are doing this.
The Time is Ripe for Gifts
For one, interest rates are super low. Second, the federal exemption for estate and gift taxes currently remains limited to $11.58 million for single tax-filers and $23.16 million for married people filing jointly. If you remember, the Tax Cuts and Jobs Act of 2017 created this enormous increase in the cap, but that law is set to sunset (or come to an end) at the end of 2025. This means unless Congress passes new legislation continuing this law or amending it, then it will go back to the prior amount of just $5 million for individuals and $10 million for couples. This may seem like a lot until you think about small family businesses that may have large amounts in the business.
In short, if your family’s business assets and total gross valuation are greater than the old gift and estate tax limits, you may want to consider giving away some of the business now. Currently, a couple can give each child up to $30,000 as a gift without triggering tax liabilities.
Time to Borrow and Grow
Maybe it is time to expand or make some major renovations. As a small business, you may have employees on furlough or laid off due to the pandemic. You may be shut down for a long time. This may seem like a time to hold onto cash, but it could also be the perfect time to expand. With many businesses folding, if a small company has liquidity, they may consider doing some long-overdue repairs, remodeling projects or expansions. The Federal Reserve has a current prime rate of 3.25 as of October 29, 2020, and the loan rates are among the lowest they have been in a century. So, it could be a great time to capitalize on this once-in-a-lifetime opportunity to grow your business at a great low rate.
Legal Help for Your Small Business
Whether you are facing employee disputes or trying to navigate state and federal laws while expanding your business, a skilled business and estate planning attorney is here to help. At the Sejour-Gustave Law Firm, PLLC, our team is ready to help you make the most of this difficult time and continue growing and preserving your legacy for generations to come. Call or find us online to learn more about how we can help.