Being in business today is as challenging as ever. Allow us to show you how some of our strategies may be able to positively affect your bottom line.
Employee Benefits at Substantial Savings
While your business operates to provide goods and services to its clients, to retain the best employees and executives, certain benefits should be considered standard.
Using our Deminimus program, many businesses find that they may potentially save up to fifty percent on some benefits programs, without changing the benefits themselves, and in some cases can increase some benefits. We achieve this through negotiating down our compensation and some administrative expenses with the insurance carriers. We believe that this sacrifice on our part, to help improve your company benefits, will ultimately allow us to grow with our clients. Call for a no-obligation consultation (815) 788-6013.
This is probably the best alternative to the high burden, confusing, expensive and outdated Non-Qualified Deferred Compensation (NQDC) for small businesses. Like NQDC, it is optional and discriminatory. However, there are no administrative costs or burdens whatsoever and works just as well for an S-Corp or any type of entity. This is a favorite plan of our clients who are small business owners because it is easy to understand, implement, maintain and fund. Call for a no-obligation consultation (815) 788-6013.
Closely-Held Insurance Company (CHIC), or Captive Insurance Company
You are a small business owner and have maximized your 401(k) contribution to the company retirement plan. Your company has maximized the profit sharing contribution to the corporate retirement plan as well.
A CHIC, or Closely-Held Insurance Company, allows a business owner transfer certain risks away from their primary firm to a privately owned insurance company. If you plan to sell your business in the future, there are tax advantages to owning a CHIC. This is an excellent tool if used properly.
Our CHIC team has decades of experience and many successful IRS audits under their belts. Although there are many benefits to this arrangement, there are requirements that must be met in order for it to be a viable strategy. Call us and ask to speak with one of our ‘CHIC’ specialists at (815) 788-6013.
Tax Efficient Business Transition
Privately held business owners have several options when deciding it is time to enjoy the fruits of their labor through a business transition or exit stragegy. They can transition the firm to the next generation of family members, sell to the current employees through an ESOP or LESOP; or sell outright to an outside buyer.
In all cases, there may be serious tax consequences. Our ‘Control’ program provides for an optimum manner of tax reduction, mitigation or delay so that you and yours can enjoy the maximum income available from whatever method you chose to be your preferred journey. Call for a no-obligation consultation (815) 788-6013.
ECLAT (Enhanced Charitable Lead Annuity Trust)1
The Enhanced Charitable Lead Annuity Trust (ECLAT) is a flexible planning tool that combines wealth transfer, charitable giving, and income tax reduction. The ECLAT was created by top attorneys to address the high taxation problem that occurs when a client dies with an IRA and an estate tax due. As such, it is an efficient way to transfer a large IRA, 401(k), or other tax-deferred asset.
At death, the IRA can be reduced by two-thirds (2/3) or more due to estate and income taxes (IRD). The implementation of the ECLAT can eliminate nearly all taxes, benefit charity, and transfer much more money to the heirs compared to the status quo.
Additionally, in the circumstance of divorce, an ECLAT is an excellent solution for ensuring payment of child support, and to leave a legacy for your children while bypassing your former spouse. Call for a no-obligation consultation (815) 788-6013.
Enhanced Charitable Lead Annuity Trust Example
The general structure may look like this for a 60-year-old male:
$1 million is contributed to an ECLAT that is based on the life of the grantor/insured (not a fixed term of years). The ECLAT is designed to pay $5,000 per year to charity for the duration of the trust (lifetime of the insured), and at the end of the trust an additional payment of $1.5 million will be made to charity. For this illustration, we will use the January 2010 Section 7520 rate of 3.0%. This rate is used to determine the present value of the future gift of life insurance to the charity that, in turn, determines the amount of tax deduction.
Of the $1 million contribution, $100,000 is set aside to purchase an income-producing municipal bond portfolio. The income and principal of this bond portfolio is adequate to maintain an annual payment to charity of $5,000. The remaining $900,000 is used to purchase a paid-up life insurance policy on the life of the grantor for the amount of $3.8 million.
At death, there will be a final payment to charity of $1.5 million. The heirs will receive $2.3 million of the remaining proceeds of the life insurance policy, and they will also receive the remaining balance of the muni-bond account. Under these facts, the charitable deduction would be $820,734 (82% deduction). Giving more to charity would generate a larger deduction while giving less will reduce the deduction but increase the remainder interest to the heirs.