Business Briefs

Launching a new business brings tough decisions. And that holds true whether you’re a fledgling entrepreneur starting your first company or an experienced businessperson expanding into a second or third enterprise.

Among the most important calls you’ll need to make is how to structure the start-up for tax purposes. For many business owners, electing S corporation status is a savvy move. But it’s not right for everyone. Here are some important points to consider before you decide.

What’s it all about?

An S corporation is a tax election available only to certain U.S. companies. To make the election, you’ll need to file IRS Form 2553, “Election by a Small Business Corporation,” typically within 75 days of forming the business or the start of the tax year to which you want the election to apply.

If you elect S corporation status, the IRS will treat your start-up as a “pass-through” entity. This means the business generally won’t pay federal income taxes. Instead, profits and losses will pass through to your individual tax return and those of other shareholders.

As a result, you’ll avoid the “double taxation” faced by shareholders of C corporations — whereby the company pays taxes on the business’s income and then shareholders pay tax on any dividends received. In addition, S corporation shareholders may be eligible for the Section 199A qualified business income deduction for pass-through entity owners. It was recently made permanent under the One Big Beautiful Bill Act.

Which businesses qualify?

IRS rules limit which companies can elect S corporation status. To qualify, your start-up must:

• Be an eligible domestic corporation or limited liability company (LLC),
• Have no more than 100 shareholders who must be U.S. citizens or residents (certain trusts and estates may also be eligible), and
• Offer only one class of stock.

Insurance companies, financial institutions using the reserve method of accounting and domestic international sales corporations are generally ineligible.

Why do it?

As mentioned above, the main advantage of electing S corporation vs. C corporation status is avoiding double taxation. But there are other reasons to do it.

For example, many start-ups incur losses in their first few years. S corporation status allows owners to offset other income with those losses, a tax benefit that’s unavailable to C corporation shareholders.

S corporations also have advantages over other types of pass-through entities. Generally, all trade or business income that flows through to sole proprietors and partners in partnerships is subject to self-employment taxes — even if the income isn’t actually distributed to the owners. S corporations can divide their income into shareholder-employee salaries and distributions. The salary portion is subject to payroll taxes, but distributions aren’t. So, by drawing a smaller salary (but one that’s reasonable in the eyes of the IRS) and taking the remainder as distributions, S corporation shareholder-employees can reduce their overall tax burden.

Liability protection is another advantage S corporations have over sole proprietorships and partnerships. S corporation status shields shareholders’ personal assets from business debts and legal claims, provided applicable rules are followed. Operating as an S corporation can also make your new business appear more credible to lenders, investors and customers because of its formalized, protective framework.

What are the drawbacks?

Electing to be treated as an S corporation has its drawbacks. Your start-up will have to follow strict IRS rules, which include keeping up with filing requirements and maintaining accurate financial records. Failure to comply could lead to back taxes, interest and penalties. It could even mean losing your S corporation status in a worst-case scenario.

Indeed, S corporations tend to incur higher administrative expenses than other pass-through entities. You’ll need to file corporate tax returns and meet state-level requirements. The extra complexity may outweigh the tax advantages — especially for newly launched companies with little to no profits.

Finally, it bears repeating: Although the salary/distributions income-splitting strategy mentioned above is advantageous, it can draw IRS scrutiny. Paying shareholder-employees an unreasonably low salary to avoid payroll taxes could trigger an audit with negative consequences.

Who can help?

Congratulations and best wishes on your forthcoming start-up! Electing S corporation status may be the right way to go. However, you’ll need to assess a wide variety of factors, including projected profits, the number of shareholders and your comfort level with the administrative requirements.

Before you do anything, contact us. We can help you evaluate whether operating as an S corporation aligns with your strategic and financial goals. If it does, we’d be happy to assist you with the filing process and compliance going forward.

© 2025

Today’s employees have a wealth of information at their fingertips and many distractions competing for their attention. Maintaining focus and productivity can be challenging.

One proven lever for promoting engagement is a performance-based bonus plan. When carefully structured, these plans acknowledge individual contributions while accelerating the company toward its strategic goals. However, if not optimally designed, bonuses can backfire — feeding worker frustration and wasting resources. That’s why the right approach is essential.

What are the goals?

The first step in creating an effective employee bonus plan is to set specific and reasonable strategic goals that inspire employees and improve your business’s financial performance. They should be tied to metrics that describe intended operational improvements, such as:

• Increased sales or profits,
• Enhanced customer retention, or
• Reduced waste.

Structure the bonus plan so that staff members’ priorities and performance goals align with the company’s strategic goals, as well as the purpose of their respective positions. Employee goals must also be specific and measurable. You may allow some workers to set “stretch” goals that require them to exceed normally expected performance levels. But don’t permit anything so difficult that an employee will likely get discouraged and give up.

It often makes sense to also set departmental goals. This way, team members can better see how their work, both individually and as a group, propels progress toward company goals. For example, the bonuses of assembly line workers at a manufacturing plant could be tied to limiting unit rejects to no more than 1%. This, in turn, would directly relate to the business’s strategic goal of reducing overall waste by 5%.

How can you do it right?

A well-structured bonus plan should do more than set employees on a “side quest” to earn more money. Ideally, it needs to educate and inspire them to think more like business owners seeking to grow the company rather than workers earning a paycheck.

For starters, keep it simple. Sometimes, bonus plans get so complicated that employees struggle to understand what they must do to receive their awards. Design a straightforward plan that clearly explains all the details. Write it in plain language so both leadership and staff have something to refer to if confusion arises.

Also, seek balance when calculating bonus amounts. This can be tricky: A bonus that’s too small won’t provide adequate motivation, while an amount that’s too large could cause cash flow issues or even jeopardize the bottom line. Many businesses structure their incentive arrangements as profit-sharing plans, so payouts are based directly on the company’s profitability.

Make the plan flexible, too, by adjusting it as business conditions change. For instance, you might tweak your bonus plan when you update your company’s strategic goals at year end. But don’t set goals that are too open-ended. Measure both strategic and individual goals on a consistent schedule with firm starting and ending dates. Companies generally track goals quarterly or annually.

Finally, consider allowing the highest achievers to reap the biggest rewards. In many businesses, salespeople have the biggest impact on the company’s overall performance. If that’s the case for your business, perhaps your sales team should be able to earn the highest amounts.

Who can help?

A thoughtfully designed bonus plan can align employee efforts with company priorities while supporting long-term growth. Let us help you create one that motivates employees, safeguards your bottom line, and keeps your business in full compliance with the tax and accounting rules.

© 2025

As summer gives way to fall, many businesses begin their budget-setting processes for the upcoming year. This annual rite of passage can be stressful, contentious and, perhaps worst of all, disappointing if your budgets often fail to achieve their objectives.

The good news is that there are many ways to enhance your company’s budgeting process and improve the likelihood that you’ll get good results. Here are five to consider.

1. Optimize data

It’s not uncommon for a business to create its budget by applying an across-the-board percentage increase to the previous year’s actual results. However, this approach may be too simplistic in today’s uncertain economy and ever-changing marketplace.

That’s not to say historical results aren’t a good starting point. But keep in mind that some costs are fixed rather than variable. And certain assets, such as equipment and employees, have capacity limitations. What troubles many companies is the presence of confusing or conflicting information, which eventually hampers their budget’s efficacy.

The solution is data optimization. This is the process of refining how data is collected, stored, managed and applied to maximize efficiency and value. In the context of budgeting, data optimization involves steps such as removing duplicate entries, correcting errors and applying a standard format to strengthen accuracy.

2. Involve the entire organization

Traditionally, many businesses rely only on their accounting departments to devise a budget. However, this approach often “puts blinders” on a company, leaving it at a disadvantage. When creating your budget, seek input from the entire organization.

For example, your sales department may be in the best position to help you accurately estimate future revenue. Meanwhile, your operations or production managers can offer insights into potential staffing adjustments and expenses related to equipment maintenance or replacement.

Soliciting broad participation also gives departments a greater sense of involvement in the budgeting process. In turn, this can help enhance employee engagement and improve your odds of achieving budgeted results.

3. “Sell” it to staff

Good budgets encourage the hard work needed to grow revenue and cut costs. But targets must be attainable. Employees will likely become discouraged if they view a budget as unattainable or out of touch with current market trends — or reality in general. After years of failed attempts to meet budgets, workers may start to ignore them altogether.

If this has been an issue for your business, you might need to “sell” your budget to staff. Doing so centers on devising and executing a communication strategy that clearly explains each budget’s rationale and objectives. Tying annual bonuses to achieving specific targets may encourage greater buy-in as well.

4. Monitor cash flow

Even if expected revenue is forecast to cover expenses for the year, unexpected fluctuations in production costs can lead to temporary cash shortages. Slow-paying customers and uncollectible accounts may also inhibit cash flow.

The truth is, any unanticipated cash shortfall can seriously derail your budget. So, once yours is set, monitor all your cash flows weekly or monthly. Then, create a plan for managing any major shortfalls that may occur.

For instance, you and other owners may need to contribute extra capital. Or you might need to apply for a line of credit at your current bank or another one. Additionally, you might consider:

• Buying materials on consignment,
• Delaying payments to vendors (as long as you don’t incur penalties), or
• Tightening terms with slow-paying customers.

Bottom line: Don’t put a budget in place and expect it to run on autopilot. Keep a close eye on cash flow and make adjustments as necessary.

5. Get an objective opinion

Many companies’ budgets suffer from the old “because we’ve always done it that way” mentality. For a fresh perspective and an objective opinion on your budgeting process, please keep our firm in mind. We can help your business strengthen its budget by showing you how to better analyze historical financial data, forecast future performance, identify cost-saving opportunities, integrate tax planning and more.

© 2025

Whether signing a vendor agreement, approving a repair estimate or applying for a loan, chances are you’ve signed something digitally in recent months. In 2025, digital documents and e-signatures are no longer just a convenience — they’re fast becoming the standard.

Businesses of all types and sizes are embracing digital workflows to improve efficiency, reduce turnaround times and meet customer expectations. If your company is still relying on paper documents and manual signatures, now may be the time to take a fresh look at what you might be missing.

Potential advantages

For small to midsize businesses, there are generally three reasons to use digital documents with e-signatures. First, of course, it’s faster. When you can review and sign a business document electronically, it can be transmitted instantly and approved much more quickly.

And this works both ways: your customers can sign contracts or submit orders for your products or services, and you can sign similar documents with vendors, partners or consultants. What used to take days or even weeks, as delivery services carried out their duties or paper envelopes crisscrossed in the mail, can now occur in a matter of hours.

Second, it’s a strong safeguard against disaster, theft and mishandling. Paper is all too easily destroyed, damaged, lost or stolen. That’s not to say digital documents are impervious to thievery, corruption and deletion. However, a trusted provider should be able to outfit you with software that not only allows you to use digital documents with e-signatures, but also keeps those files encrypted and safe.

Third, as mentioned, more and more customers want it. In fact, this may be the most important reason to incorporate digital documents and e-signatures into your business. Younger generations have come of age using digitized business services. They expect this functionality and may prefer a company that offers it to one that still requires them to put pen to paper.

Valid concerns

Many business owners continue to have valid concerns about digital documents and e-signatures. For example, you may worry about how legally binding a digitized contract or other important document may be. However, e-signatures are now widely used and generally considered lawful under two statutes: 1) the Electronic Signatures in Global and National Commerce Act of 2000, a federal law, and 2) the Uniform Electronic Transactions Act, which governs each state unless a comparable law is in place.

Indeed, every state has legislation in place legalizing e-signatures. There may be some limited exceptions in certain cases, so check with your attorney for specifics if you decide to transition to using the technology.

Another concern you might have is cybersecurity. And there’s no doubt that data breaches are now so common that business owners must expect hacking attempts rather than hope they never happen.

As mentioned, a reputable provider of digital document technology should be able to equip your company with the necessary tools to defend itself. But don’t stop there. If you haven’t already, establish a sound, regularly updated cybersecurity strategy that encompasses every aspect of your business — including when and how digital documents and e-signatures are used.

Strategic move

Implementing this increasingly used technology is a strategic move. As such, it will likely involve costs related to vetting software providers, training your team, and updating internal assets and processes. But it also may be a wise investment in faster transactions, improved security and a better customer experience. Plus, you’ll pay less in express delivery fees. We can help you evaluate the idea, forecast your return on investment, and, if appropriate, build a smooth transition plan that fits your budget and goals.

© 2025

For businesses looking to reach the next level of success, there’s no bigger star than organic sales growth. Simply defined, this is achieving an increase in revenue through existing operations rather than from mergers, acquisitions or other external investments.

As you’ve likely noticed, coaxing this star into the spotlight isn’t easy. How can you set the stage for organic sales growth? Here are some fundamental ways.

It begins with customer service

Organic sales growth largely comes from getting more from your current customer base. Accomplishing this feat begins with premier customer service, which means more than just a smile and a handshake. Are your employees really hearing the issues and concerns raised? Do they not only solve problems, but also exceed customers’ expectations whenever possible?

The ability to conduct productive dialogues with customers is key to growing sales. Maintaining a positive, ongoing conversation starts with resolving any negative (or potentially negative) issues that arise as quickly as possible under strictly followed protocols. In addition, it includes simply checking in with customers regularly to see what they may need.

Marketing counts

Boosting sales of any kind, organic or otherwise, inevitably involves marketing. Do you often find yourself wondering why all your channels aren’t generating new leads at the same level? Most likely, it’s because your messaging on some of those channels is no longer connecting with customers and prospects.

On a regular basis, you might want to step back and reassess the nature and strengths of your company. Then use this assessment to revise your overall marketing strategy.

If you work directly with the buying public, you may want to cast as wide a net as possible. But if you sell to a specific industry or certain types of customers, you could organically grow sales by focusing on professional networking groups, social organizations or trade associations.

People matter

At the end of the day, organic sales growth is driven by a business’s people. Even the best idea can fail if employees aren’t fully prepared and committed to design, produce, market and sell your products or services. Of course, as you well know, employing talented, industrious staff requires much more than simply getting them to show up for work.

First, you must train employees well. This means they need to know how to do their jobs and how to help grow organic sales. You might ask: Does every worker really contribute to revenue gains? In a sense, yes, because everyone from entry-level staff to executives in corner offices drives sales.

Second, beyond receiving proper training, employees must be cared for and inspired through valued benefits and a positive work environment. Happy workers are more productive and more likely to preach the excellence of your company’s products or services to friends and family. Organic sales may occur as a result.

Star of the show

It’s the star of the show for a reason. Organic sales growth is generally considered more sustainable than inorganic revenue gains and a strong indicator of a healthy, competitive business. It also avoids the integration and compliance risks of mergers and acquisitions, not to mention the complications and dangers of acquiring outside financing. We can help you identify your company’s optimal strategies for achieving organic sales growth.

© 2025

Running a successful business calls for constantly balancing the revenue you have coming in with the money you must pay out to remain operational and grow. Regarding that second part, careful accounts payable (AP) management is critical to strengthening your company’s financial position.

Proper AP management enables you to maintain strong relationships with vendors, suppliers and other key providers. It also helps ensure you avoid costly mistakes, prevent fraud and maintain a steady cash flow. Underperforming at AP management may hamper your ability to obtain the materials or services you need to operate, damage your business’s reputation, and trigger financial penalties or other losses.

3 building blocks

No matter the size or type of company, most businesses’ AP management rests upon three fundamental building blocks. The first is documentation. You’ve got to accurately track how much your company owes and to whom.

Every invoice must be matched with a purchase order and proof of receipt. Mistakes can be costly in ways that aren’t always obvious. For example, overpaying or double paying invoices drains cash flow unnecessarily, and these amounts can be difficult to recover. Implementing, maintaining and continuously improving a top-notch AP management system helps ensure you know exactly what you owe and when payments are due.

The second building block is control of approvals. Before any invoice is paid, an authorized party in your business — whether it’s you or a trusted manager or other employee — should confirm it’s legitimate and matches the items ordered or services provided. This simple step is crucial to preventing payments for goods or services you never received, as well as to stopping fraud.

The third building block is the timing of payments. Many new business owners want to pay invoices as soon as they arrive. However, doing so can consume liquidity and leave you in a difficult cash flow situation. Of course, waiting too long to pay can strain relationships with creditors, trigger late fees and force your company into suboptimal payment terms down the line. Striking the right balance is key.

Best practices

For small to midsize companies, adhering to just a few best practices can stabilize AP management and set you on a path toward refining your approach over time. Begin by centralizing your AP processes with a secure, consistent system for receiving, recording and approving invoices.

Digitizing your AP records should make them easier to track and reduce the chances that an important invoice or document gets lost. Moreover, the right technology can help you analyze your payables to spot troubling trends or seize opportunities.

AP software enables you to track key metrics over time. One example is days payable outstanding (DPO). It measures how many days it takes your business, on average, to pay creditors. Generally, the formula goes:

DPO = (average AP / cost of goods sold) × 365 days

By regularly monitoring and benchmarking these and other relevant metrics, you can pinpoint optimal timing of payments, better manage cash flow and build your cash reserves.

It’s also worth reiterating the importance of clear, comprehensive and strictly enforced payment approval policies. Carefully vet who within your business has the power to approve invoices. Some companies require more than one person to approve bills exceeding a certain dollar amount.

To help prevent fraud, segregate or rotate duties related to receiving, recording and approving invoices. Regularly reconcile your AP ledger with supporting documentation, such as vendor statements, to catch signs of wrongdoing or errors.

Improve, strengthen, optimize

Many business owners avoid or underemphasize AP management because, let’s face it, no one likes paying the bills. However, allowing this area of your company to languish can lead to any number of financial misfortunes. We can review your AP processes and identify ways to improve data capture and efficiency, strengthen internal controls, and optimize payment timing to benefit cash flow.

© 2025

When many small to midsize businesses are ready to sponsor a qualified retirement plan, they encounter a common obstacle: complex administrative requirements. As a business owner, you no doubt already have a lot on your plate. Do you really want to deal with, say, IRS-mandated testing that could cause considerable hassles and expense?

Well, you may not have to. If that’s the only thing holding you back, consider a safe harbor 401(k) plan. These plans are designed to simplify administration and allow highly compensated employees to contribute the maximum allowable amounts. Of course, you still must read the fine print.

Simple trade-off

Under IRS regulations, traditional 401(k) plans are subject to annual nondiscrimination testing. It includes two specific tests:

1. The actual deferral percentage (ADP) test, and
2. The actual contribution percentage (ACP) test.

Essentially, they ensure that a company’s plan doesn’t favor highly compensated employees over the rest of the staff. If a plan fails the testing, its sponsor may have to return some contributions to highly compensated employees or make additional contributions to other participants to correct the imbalance. In either case, the end result is administrative headaches, unhappy highly compensated employees and unexpected costs for the business.

Safe harbor 401(k)s offer an elegant solution to the conundrum, albeit with caveats of their own. Under one of these plans, the employer-sponsor agrees to make mandatory contributions to participants’ accounts. In exchange, the IRS agrees to waive the annual requirement to perform the ADP and ACP tests.

With nondiscrimination testing off the table, you no longer need to worry about failing either test. And highly compensated employees can max out their contributions. Under IRS rules, these generally include anyone who owns more than 5% of the company during the current or previous plan year or who makes more than $160,000 in 2025 (an amount annually indexed for inflation).

Important caveats

Regarding the caveats we mentioned, the primary one to keep in mind is that you must make compliant contributions to each participant’s account. Generally, you may choose between:

• A nonelective contribution of at least 3% of each eligible participant’s compensation, or
• A qualifying matching contribution, such as 100% of the first 3% of compensation deferred under the plan plus 50% of the next 2% deferred.

There’s also the matter of timing. Let’s say you want to set up and launch a safe harbor 401(k) plan this year. If so, you’ll need to complete all the requisite paperwork and deliver notice to employees by October 1, 2025, and contributions must begin no later than November 1, 2025.

Providing proper notice is critical. You must follow specific IRS rules to adequately inform employees of their rights and accurately describe your required employer contributions.

Potential pitfalls

Perhaps you’ve already spotted the major pitfall of safe harbor 401(k)s. That is, you must commit to making qualifying employer contributions. And once you do, you generally can’t reduce or suspend them without triggering additional IRS requirements or risking plan disqualification. There are exceptions, but qualifying for them is complex and requires careful planning.

In addition, your contributions are immediately 100% vested, and participants own their accounts. That means once you transfer the funds, they belong to participants — even if they leave their jobs.

Bottom line

The bottom line is safe harbor 401(k) plans can be risky for businesses that experience notable cash flow fluctuations throughout the year. However, if you’re able to manage the mandatory contributions, one of these plans may serve as a relatively simple vehicle for amassing retirement funds for you and your employees. We can help you evaluate whether a safe harbor 401(k) would suit your company.

© 2025

Slow cash flow is one of the leading causes of insomnia for business owners. Even if sales are strong, a lack of liquidity to pay bills and cover payroll can cause more than a few sleepless nights. The good news is that you can rest easier by exercising sound cash flow management.

Scrutinize your cycles

Broadly speaking, nearly every business — no matter what it does — has two cycles that determine how the dollars flow. These are:

1. The selling cycle. This is how long it takes your business to:

• Develop a product or service,
• Market it, and
• Produce the product or service, close a sale, and collect the revenue.

Good accounts receivable processes — from clearly and accurately invoicing to implementing online payment methods for faster access to money — are a major aspect of cash flow management.

Less experienced business owners often underestimate the length of the selling cycle. Many a start-up has been launched with a budding entrepreneur believing the company could get its wares to market, close deals and earn revenue quickly. Grim reality usually followed.

However, even business owners who’ve been around for a while can miss changes to their selling cycles. Regular customers on whom the company depends may start taking longer to pay, or a key employee might jump ship and be hard to replace. Inefficiencies such as these are often exposed when economic conditions deteriorate.

2. The disbursements cycle. This is how your business manages regular payments to employees, vendors, creditors (including short- and long-term financing) and other parties. As payments go out, cash flow is obviously affected.

Track the timing

The selling and disbursements cycles aren’t separate functions; they overlap. But if they don’t do so evenly, delayed cash inflows can create a crisis. You want them to match as evenly as possible. Or better yet, you want to convert sales to cash more quickly than you’re paying expenses.

How can you keep tabs on it all? First, study your statement of cash flows whenever your company’s financial statements are generated. But do more than that. Regularly create cash flow statements. Despite their similar-sounding name, these reports are run more frequently — usually monthly or quarterly. You can also use financial software to set up a digital dashboard that displays weekly or even daily cash flow metrics.

Take control

If you see warning signs of an imminent cash crunch, consider these options to better control the potential crisis:

Slow down growth. Rapid growth can be both a blessing (you’re selling more) and a curse (you’re spending more on production). Cash shortages often result from a substantial mismatch between the selling and disbursement cycles, which can easily occur during high-growth periods. Out-of-control growth can also impair quality, which, in turn, sours relationships with customers and hurts your company’s reputation in the marketplace.

Review expenses. Sometimes, you can lower monthly cash outflows by converting costs from fixed to variable. Fixed expenses include mortgage or lease payments, payroll, and insurance. When an employee quits, consider using an independent contractor to fill the position. Or if a key piece of equipment breaks, explore leasing rather than purchasing. In addition, review your company’s tax planning strategies. A lower tax bill can make a big difference in cash flow.

Address asset management. How much money are you making for each dollar that’s invested in working capital, equipment and other assets? By monitoring turnover ratios, you may be able to identify and reduce weaknesses in asset management. For example, an increase in “days outstanding” in accounts receivable might improve with tighter credit policies, early-bird discounts or incentives for employees who handle collections.

Essential skills

Strong cash flow management skills are essential to running a successful business. We can review your sales and disbursement cycles, improve your financial reporting, and identify ways to manage your company’s cash better.

© 2025

The future often weighs heavier on the shoulders of family business owners. Their companies aren’t just “going concerns” with operating assets, human resources and financial statements. The business usually holds a strong sentimental value and represents years of hard work involving many family members.

If this is the case for your company, an important issue to address is how to integrate estate planning and succession planning. Whereas a nonfamily business can simply be sold to new ownership with its own management, you may want to keep the company in the family. And that creates some distinctive challenges.

Question of control

From an estate planning perspective, transferring ownership of assets to the younger generation as early as possible allows you to remove future appreciation from your estate, thereby minimizing estate taxes. Proactive planning may be especially relevant today, given the federal estate and gift tax regime under the Tax Cuts and Jobs Act.

For 2025, the unified federal estate and gift tax exemption is $13.99 million ($27.98 million for a married couple). Absent congressional action, this lifetime exemption is scheduled to drop by about half after this year. As of this writing, Congress is working on tax legislation that could potentially extend the current high exemption amount.

However, when it comes to transferring ownership of a family business, you may not be ready to hand over the reins — or you may feel that your children (or others) aren’t yet ready to take over. You may also have family members who aren’t involved in the company. Providing these heirs with equity interests that don’t confer control is feasible with proper planning.

Vehicles to consider

Various vehicles may allow you to transfer family business interests without immediately giving up control. For example, if your company is structured as a C or S corporation, you can issue nonvoting stock. Doing so allows current owners to retain control over business decisions while transferring economic benefits to other family members.

Alternatively, there are several trust types to consider. These include a revocable living trust, an irrevocable trust, a grantor retained annuity trust and a family trust. Each has its own technical requirements, so you must choose carefully.

Then again, you could form a family limited partnership. This is a legal structure under which family members pool their assets for business or investment purposes while retaining control of the company and benefiting from tax advantages.

Finally, many family businesses are drawn to employee stock ownership plans (ESOPs). Indeed, an ESOP may be an effective way to transfer stock to family members who work in the company and other employees, while allowing owners to cash out some of their equity in the business.

You and other owners can use this liquidity to fund your retirements, diversify your portfolios or provide for family members who aren’t involved in the business. If an ESOP is structured properly, you can maintain control over the business for an extended period — even if the ESOP acquires most of the company’s stock.

Not easy, but important

For family businesses, addressing estate and succession planning isn’t easy, but it’s important. One thing all the aforementioned vehicles have in common is that implementing any of them will call for professional guidance, including your attorney. Please keep us in mind as well. We can help you manage the tax and cash flow implications of planning a sound financial future for your company and family.

© 2025

Every company presumably wants a workforce full of engaged employees. However, is it possible for workers to be too engaged?

Apparently so. A 2024 survey of 3,000 workers by employee engagement consultants Perceptyx found that 72% of respondents work to some degree throughout their vacations. As a business owner, your initial response to this might be, “Wow, those are some dedicated individuals!” However, the long-term impact of the practice can be harmful to both your “workationers” and company.

No rest for the worker

For starters, when employees don’t completely step away from their jobs for a while, their brains never get a chance to rest. As a result, the fresh perspectives and renewed energy that usually materialize following an extended break never do. It should also be noted that the work employees perform while on vacation is typically rushed or half-baked, which may lead to costly mistakes and miscommunications.

In addition, productivity may gradually decline. Although working on vacation likely boosts an employee’s productivity in the short term, a workactioner’s long-term productivity may slowly drop off as the person grows weary and uninspired.

The most perilous consequence for workationers is that they never recharge and wind up burned out and disengaged. This can lead to or worsen mental health conditions such as anxiety and depression. Some employees may even decide to quit.

Companywide effect

From a wider perspective, the negative impact of employees working while on vacations can accumulate to hurt your company’s performance. Many business owners wake up one day to realize that their company cultures have evolved to embody the expectation that everyone must stay connected to work 24/7 — even when taking time off. This can lead to conflicts, resentment and lower morale.

It may also reduce innovation and impair strategic planning. When no one is taking a real break, there are no opportunities to step back and have that “ah ha!” moment. Workationers on your leadership team might be unable to tear themselves away from the daily grind to help you identify growth opportunities.

And yes, there may be real financial costs. Widespread declines in work quality and productivity inevitably cut into a company’s bottom line. Higher turnover means greater hiring and training costs — and even more lost productivity if vacated positions are left open for a while. Last but not least, don’t forget that dishonest employees who never disconnect from their jobs could be committing fraud.

How to address the issue

To protect your business from the risks of workactioners and promote a healthier culture in general:

• Explicitly inform and regularly remind employees that vacations are time off from work; you don’t expect them to check in or otherwise perform tasks,
• Establish a written policy fully describing the boundaries that employees should adhere to when they’re on vacation as well as when colleagues are out,
• Create support systems for employees, such as pre-vacation checklists and cross-training, so others can cover critical tasks while someone is out, and
• Prioritize mental health and wellness in your fringe benefits, HR initiatives and communications.

Finally, to the extent possible, lead by example! Although it’s certainly not easy for any business owner to completely disconnect, try to minimize contact with your company while on vacation.

Real risks

Employing multiple workationers may seem harmless or even like a good thing. However, it carries real risks. Now that you know about the problem, next steps might be surveying employees about the issue and discussing it with your leadership team. We can help you calculate productivity metrics and weigh the costs of initiatives and benefits aimed at helping workers maintain a healthy work-life balance.

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