Dividing the Family Business

One of the most difficult decisions facing the owner of a family business is how to divide a family business when 1 or more children work in the business and 1 or more children are not involved in the business. Although the initial inclination often is to divide the business equally between the children, a careful analysis of the situation usually results in a conclusion that equally is not fair with respect to differently situated children. A better result is achieved when the business owner attempts to treat each child fairly rather than equally. Many family businesses have failed due to the problems caused by dividing the family business equally between the children who work in the business and the children who do not work in the business. Good planning can help solve this problem as well as preserve harmony in the family. Many tools exist to help solve this problem and because each situation is different no one tool is the magic solution. A later blog will discuss some of the available tools for business succession planning.

Immediate Implication of Health Care Legislation to Employers

Beginning on January 1, 2011 numerous changes will occur affected employers of all sizes as a result of the health care legislation that passed in March of this year. 

• Coverage for all dependent children up to age 26.  The definition for "dependent" child is not the same as in the IRS regulations, it is much broader and will include nearly every adult child;
• No lifetime policy limits, and by 2014 no annual limits;
• No preexisting condition exclusion for children under age 19.  This will be phased out and beginning in 2014 no one can be excluded for a preexisting condition;
• No reimbursement for over the counter drugs from HSA's (Health Savings Accounts).

In addition, starting in 2012, all business purchases that exceed $600 in a calendar year will require a 1099 filing.  This will have a hugely negative effect on business by greatly increasing the cost and time to conduct ordinary business.  Even the smallest of businesses, purchasing supplies from a big box retailer such as Office Depot or Staples, will certainly surpass the $600 threshold, requiring an IRS filing at the time of the transaction or face potential penalties from the IRS.

In conclusion, it is difficult to see how these changes will have a positive impact on employers cost and administrative structure.  We will address the impact of cost reporting, the employer mandate as well as the exchanges in a future posting.

Central Texas Strong for Business and Careers

According to Forbes, both Austin and San Antonio rank among the top 20 in places to have a business or career (numbers 10 and 16, respectively).  Austin ranked in the top 20 cities in terms of educational attainment, likely leading to its higher cost of labor and business.  While Austin has a higher cost to do business, both rank in the top 12 nationally in projected job growth, positioning central Texas well in these tough economic times.