If you own a family business that’s been growing or seems poised for growth, you’re not alone. You’re also not alone if you feel more worried or concerned than ever, even while your revenue and headcount trend upward. For a small business owner, it comes with the territory.
Newly released data from the bipartisan group Family Enterprise USA shows that 61% of family businesses grew last year, many by 10% or more and adding between 1 and 50 jobs to their payrolls. And that growth continues. About 74% of family businesses expect to grow more this year.
Every business owner understands that growth is a double-edged sword. Staffing, equipment, inventory, and other expenses grow, too. Then comes the payroll, property, corporate and other taxes that balloon alongside everything else. That’s why, while these family businesses are growing, their optimism about the future is at its lowest point since 2012 and worries regarding taxes are weighing heavily on their minds.
Presidential election years can exacerbate uncertainty and apprehension for small business owners (2012 was also an election year). This year seems exceptionally so. A recent Goldman Sachs survey found that 71% of business owners blame inflationary pressures for increased stress on their businesses. At the same time, 55% of small business owners believe presidential candidates aren’t talking enough about issues that concern them, “including inflation, small business tax policy, and the regulatory burden on small businesses,” the Associated Press (AP) reports.
Tax planning is more important than ever, and you don’t need to wait for things to shake out in D.C. before you set a strategy in motion. We wanted to remind you about small business success stories we’ve spotlighted throughout the years that shed light on the many forms smart tax planning can take and how it can ease worries and support growth, even through troublesome times.
Tax Savings and Growth
Matt and Lara Bruhn structured Mr. Electric with multiple LLCs to give the business room to grow while saving taxes (which it certainly did, on both accounts). And, when Lawrence and Elizabeth Stovall purchased Auto Brite Company, they pivoted the business right out of the gate, building new product lines and recategorizing as a manufacturer to optimize tax savings.
Success Across Generations
We love featuring the folks at Magnolia Pancake Haus so much that we’ve done it three times! Tricia Fleming Schleicher and her father, Robert Fleming, are a terrific example of succession success, even through impossible times (the pandemic). Another favorite succession story is JR Ramon Demolition, a family business that has remained strong through three generations and counting.
Franchise Success
It’s easy to assume that taxes and factors that affect them, like business structure, aren’t a huge consideration for those buying into an already-established franchise or licensing agreement model. However, that can be a costly assumption. As Party City franchise ownerDon Lasseter and American Dream Vacations of Houston’s Bart Bonham can attest, owners should consider their own, individual business structure.
Success and growth are scary, especially in uncertain times. Tax-saving strategies such as structuring the business appropriately, exploring tax credits and deductions, considering business succession, and staying informed about changing regulations can provide a solid foundation and peace of mind. Feel free to contact us with questions.
