Co-owner buyers need a buy-sell agreement!

Buying a business with co-owners?

Then you need to set up a buy-sell agreement. And fast.

Why? Because a well drafted agreement can…

1. Transform your business ownership interest into a more liquid asset
2. Prevent unwanted ownership changes
3. Save taxes and avoid hassles with the IRS

If you want to find out how buy-sell agreements work and how they can keep you out of trouble, now is the time to read my new article titled Tax Tips: Buying a Business with Co-Owners? You Need a Buy-Sell Agreement!

Four ways our fact-filled article can help you:

1. You’ll learn important buy-sell agreement basics. For starters, you should know that there are two types of agreements: A cross-purchase agreement is a contract between you and the other co-owners. A redemption agreement is a contract between the business entity itself and its co-owners (including you). We’ll explain the differences in detail when you read the full article.
2. We’ll tell you how to handle valuation and payment terms the right way. Common valuation methods include calculating a fixed per-share price, or following a formula that sets the selling price as a multiple of earnings or cash flow. Don’t forget to make sure that your price-setting method will be respected by the IRS for federal estate-tax valuation purposes. Also make certain that the agreement specifies how amounts will be paid out to withdrawing co-owners or their heirs under various triggering conditions. You’ll get the whole story when you read the full article.
3. We’ll explain how to use life insurance to fund your buy-sell agreement. When a triggering event like death or disability occurs, you’ll need money to finance buyouts of the withdrawing co-owners. Life insurance policies can provide the cash you’ll require at exactly the time you need it. Lots of important information is waiting for you when you read the full article.
4. You’ll learn how a buy-sell agreement can protect your heirs. You should know that your heirs can face two big potential problems if you don’t have a buy-sell agreement in place. First, there may be no market for your business ownership-interest and they may be forced to pay estate taxes. Second, your heirs may have to fight the IRS over valuing your share of the business for federal estate-tax purposes. The bottom line? You can do your heirs an enormous favor by creating a buy-sell agreement at an early date. We’ll give you all the details when you read the full article.