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Succession Planning for Women Business Owners

October 27, 2023 By Nick Thom

Women entrepreneurs face a unique set of hurdles when it comes to starting new businesses, particularly in a post-pandemic world. In 2021, women started about 40 percent of all new businesses, and this figure has remained fairly steady for decades.¹

With the unique stresses of operating a brand-new business, many women business owners may not give a lot of thought to succession planning. However, life is full of unexpected twists and turns, and succession planning can be a critical step in ensuring the long-term health and viability of your business. Below, we discuss a few tips and tricks when it comes to planning your business’s future.

Select a Successor

Selecting someone to run your business in your absence can be a hard decision. Not only do you want someone who shares your goals, values, and vision, but you also want someone you can trust with day-to-day operations long before your planned retirement or departure date. This means finding someone just as committed as you are to your business.

If your business relies on its status as a women-owned business to gain access to government contracts, grants, and loans, it’s important to find a successor who will help it maintain this status. “Women-owned business” means that women must own at least 51 percent of the business; if you’d like to sell your business to a male-female couple, you may need to structure the transaction so that a female successor has a greater share of equity than the male successor.

Value Your Business

While it might not be necessary to generate a specific value of your business today or tomorrow, it’s important to have at least a ballpark idea of its worth. By knowing what your business could potentially sell for, you’ll be in better shape to negotiate a sale or gauge the accuracy of an appraisal when it’s time for you to move on.

Ensure Open Lines of Communication

Uncertainty can be one of the biggest morale killers in a small business. The last thing you want is for your staff to feel as though their jobs aren’t secure or the business’s future is uncertain. Engaging in succession planning without clearly messaging your plans and strategies can set the rumor mill ablaze.

Though you don’t need to tell staff everything you’re planning, or even openly identify your successor, it’s a good idea to have regular meetings to discuss your business’s future more generally. Make sure your staff knows you’re open to their questions and concerns and aren’t going to make any sudden moves without giving them a heads-up.

You’ll also want to ensure you have open, honest communication with your prospective successor. It’s a good idea to schedule regular check-ins on an annual or semi-annual basis to make sure you and your successor remain on the same page. Once you’re a few years from retirement, it’s time to work with your successor to create an exit path.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking #1-05376140

Footnotes

¹ “The State of Women Entrepreneurs,” https://www.score.org/resource/blog-post/state-women-entrepreneurs

Protect Financial Information from Prying Eyes on the Web

October 20, 2023 By Nick Thom

As more and more consumers search for financial information on the Internet, they may inadvertently leave themselves open to being “tracked” by certain companies and individuals. Visitors to financial websites have created a large mass of information that is, in some cases, hardly private. Many marketing companies routinely employ software programs designed to identify you and your “surfing” habits on financial websites. Some are basic and some can be very invasive.

Individual investors are now faced with growing concerns about keeping their financial matters private. Here are several ideas to help you maintain confidentiality and keep your private matters truly private:

o Understand privacy policies. The first thing you should do is read and understand the “privacy policies” of the financial institutions you are dealing with. This is especially important if you are conducting financial transactions. Ask questions about how the financial institution intends to maintain and secure your financial information. Often, the legal jargon and descriptive material may be difficult to understand and wade through, but you can email a financial institution and request a complete explanation of its privacy policy.

o Exercise diligence. Be extremely careful about providing financial information to websites that are not well known. Larger financial institutions are developing policies to protect the rights and financial information of their customers and they get high marks for doing the job well.

o Guard personal information. As with any financial information, when providing certain financial websites with information, such as your phone number, you create a whole new world of opportunities for “cold calling” financial organizations. So, resist the temptation of providing personal information to companies who are unfamiliar to you.

o Check Website ratings. You have another valuable opportunity to discover whether your financial information is as private as you’d like. Several rating organizations now rate websites based on privacy. There are, however, few standards that guide these organizations in their rating policies. This being the case, it might be wise to check several rating organizations to see if, and how, they rank the sites you intend to explore. When online, check out a site through any of these groups: TRUSTe at www.trustarc.com, CPA WebTrust at www.cpawebtrust.org/, and Better Business Bureau Online at www.bbbonline.org/.

You should understand that these organizations cannot punish or penalize financial websites for lack of privacy. Thus, it is up to the individual to choose the sites that will provide the most confidentiality.

o Reduce or eliminate cookies. You can, in fact, take some measures to help safeguard certain financial information. Start by telling your browser not to accept cookies. The result may make surfing the net a little more difficult. On the other hand, you could choose to limit cookies or to be alerted when a cookie is set. As a third alternative, you could simply delete any cookies from your hard drive after each online session.

While maintaining anonymity on the Web is difficult, it’s important to protect your financial privacy and any financial information about your family. As time goes by, more and more protective measures can be put in place so your financial records and information will be better protected from the prying eyes of unknown third parties.

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by Liberty Publishing, Inc.

LPL Tracking #1-05233550

6 Scary Money Mistakes and How to Avoid Becoming a Financial Horror Story

October 13, 2023 By Nick Thom

Managing money may seem stressful at times. Unexpected expenses, changes in employment, and changes in family or lifestyle may all lead to money issues. Making sure you have money saved up for the unexpected is crucial. Here are some other scary money mistakes that you may want to avoid.

1. Keeping a Balance on Your Credit Card

Credit cards are necessary for building a healthy credit score, but they may quickly damage your financial health if you aren’t careful. Credit cards may be used for convenience since paying by cash and check is becoming less and less common. However, spending more than you are able to afford paying off each month might quickly derail your financial plans and cost you a significant amount in interest.¹

2. Paying Your Bills Late

One of the quickest ways to damage your credit score and limit your borrowing power is by paying bills late. Payment history is one of the most significant factors in your credit score; even missing one or two payments may cause a score drop. On top of the hit to your credit score, you may also have to pay late fees or additional interest if you don’t pay your bills on time.²

3. Waiting Too Long To Save for Retirement

Everyone hopes to have an enjoyable retirement after years of hard work. Unfortunately, you may be under financial strain with rising costs if you don’t save early. Saving for retirement early may help you to grow your money faster and better prepare for a more comfortable retirement.¹

4. Buying Things You Are Unable To Afford

Large purchases are a part of life, such as buying a car, a house, or even a boat. While it is important to enjoy your money by spending it on the things you want, it is crucial only to buy what you are able to afford comfortably. Before you decide to buy something, consider the payments required for any large purchase, the interest expense, and the associated costs of maintaining what you buy.²

5. Not Prioritizing Debt Repayment

Staying on top of your debt is critical. Failing to plan to pay it off may result in financial struggles down the road. Whether your debt includes student loans, personal loans, or credit card debt, you want to set aside enough money each month to pay the debt down. This helps manage the interest you pay and strengthen your debt-to-income ratio.²

6. Not Having Enough in Your Emergency Fund

Emergency funds are essential to take care of unexpected expenses and provide needed funds if your money source or income suddenly changes. A good rule of thumb is to put three to six months of income away to take care of emergencies. Always remember to replace the funds if you need to use them.¹

Important Disclosures:

Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 1-05376138

A Business Owner’s Guide to Long-Term Care Planning

October 6, 2023 By Nick Thom

Businesses generally are illiquid, which can create problems if a business owner requires care in a long-term care facility. LTC is ongoing care in a care facility, nursing home, or at home for those unable to perform a certain number of activities of daily living (ADL) without assistance. ADLs include eating, bathing, dressing, toileting, transferring in and out of bed, continence, or when physical, mental, or cognitive function is impaired or a doctor has ordered specific care.

If the business owner doesn’t have a business estate plan that includes long-term care (LTC) insurance or enough money to pay for their care privately, their assets may have to be liquidated. Sometimes, the business’s assets must also be liquidated, which can be difficult and take time. Regardless of the business’s income or the owner’s age, LTC insurance can help pay for care in an LTC facility. Here is why LTC insurance is essential:

To help ensure the business continues.
To protect employees, business partners, and heirs.
To help protect the wealth the business owner has created.

Since LTC costs can add up quickly, it’s important to have an LTC plan to help cover expenses. Including LTC insurance as part of your business estate plan may provide more control and choices if the need for LTC arises. Your financial, legal, and tax professionals can help you understand the importance of having LTC insurance and the tax benefits of having the business purchase LTC insurance. Due to the nuances of IRS tax codes and deductions, purchasing LTC insurance outside the business may have limited tax benefits.

LTC insurance as an employer benefit

Many businesses pay for an LTC policy for the business owner, executives, or key employees as part of their executive benefits package. Sometimes, a paid-up LTC policy can be a retirement benefit for the owner or a way to keep a key employee from leaving.

Businesses can offer LTC insurance to all employees as it has become a desired benefit due to recent LTC insurance legislation in multiple states. In these states, employees must purchase LTC insurance through their employer’s benefit plans and payroll deductions, buy LTC independently, or pay a higher state tax rate.

Offering LTC insurance as a benefit to employees provides a tax benefit to the business and shows employees you are concerned about their care. There are a couple of ways the business can deduct the cost of an LTC policy for an employee:

The business pays the total premium for an LTC policy for the employee. The employee may be the business owner or a key employee essential to business operations.
The business pays for a small base LTC policy for an employee. The employee can then purchase additional LTC coverage at their own expense through payroll deduction, and the LTC policy is portable if they leave the employer.
The business pays the employee a percentage or dollar amount toward an LTC policy. The employee must then pay the difference through payroll deduction.

Business owners must work with their financial and insurance professionals to find suitable LTC policies from reputable LTC insurance providers. While LTC policies may be similar, their cost can vary greatly. If you have any questions about LTC insurance, your financial professional can help.

Important Disclosures:

This material contains only general information and is not a solicitation to sell any Long-Term Care insurance product, nor is it intended as any financial, legal or tax advice. For information about specific Long-Term Care insurance needs or situations, contact your insurance agent. This article is intended as educational and is not intended to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by Fresh Finance.

LPL Tracking #1-05377243

Sources:

https://www.ltcnews.com/articles/multiple-states-considering-implementing-long-term-care-tax

How to Protect Your Small Business from Cyber Threats

September 29, 2023 By Nick Thom

Risk management is a key component in any successful business plan. In today’s world — where data breaches are common occurrences — it’s especially important for business owners to understand the digital risks they face. Are you doing all you can to mitigate the risk of a cyberattack?

The importance of cybersecurity

Many small-business owners may think their organizations hold little appeal to hackers due to their small size and limited scope. However, according to the Small Business Administration (SBA), this naiveté may actually make them ideal targets. Small businesses are keepers of employee and customer data, financial account information, and intellectual property. Their systems, if not adequately protected, may also inadvertently provide access to larger supplier networks. “Given their role in the nation’s supply chain and economy, combined with fewer resources than their larger counterparts to secure their information, systems, and networks, small employers are an attractive target for cybercriminals,” reports the SBA on its cybersecurity website.

Consider the following tips compiled from information

supplied by the SBA, the Federal Trade Commission (FTC), and the Federal Communications Commission (FCC).

What are your vulnerabilities?

To protect your organization, you must first understand your vulnerabilities. How are your systems protected? Do you collect and store personal information of customers and employees, such as credit-card information, Social Security numbers, and birth dates? If so, how is this information stored and who may access it? Do you store it in multiple locations and formats? Are these files password protected and, if so, are you using multiple complex passwords? Do you have a Wi-Fi accessible to employees and customers? How do your vendors and other third-party service providers protect their information? You may want to engage a professional to help identify your risks.

Tips for security

When monitoring your security, ensure you have firewall and encryption technology that protects your Internet connections and Wi-Fi networks. Make sure your business’s computers have antivirus and

anti-spyware software installed and updated automatically. Require employees and others who access your systems to use complex passwords that are changed regularly. Keep only personal data that you actually need and dispose of it securely as soon as it no longer serves a business purpose. Back up critical information and data on a regular basis, and store the backups securely offsite. Assign individual user accounts to employees and permit access to software and systems only as needed. Be especially cautious with laptops and company-assigned smartphones. Question third-party vendors to ensure that their security practices comply with your standards.

Redundancy is key

In writing or speaking, redundancy is typically not recommended unless you’re really trying to drive a point home. When it comes to your digital life, however, redundancy is not only recommended, it’s critical. That’s because redundancy means having multiple data backups stored in different locations. Here are some ideas for redundancy when backing up your data:

If you have digital assets that you don’t want to risk losing forever — including photos, videos, original recordings, financial documents, and other materials — you’ll want to back them up regularly. And it’s not just materials on your personal computer, but your mobile devices as well. Depending on how much you use your devices, you may want to back them up as frequently as every few days.
A good rule to follow is the 3-2-1 rule. This rule helps reduce the risk that any one event — such as a fire, theft, or hack — will destroy or compromise both your primary data and all your backups.
Have at least three copies of your data. This means a minimum of the original plus two backups. In the world of computer redundancy, more is definitely better.
Use at least two different formats. For example, you might have one copy on an external hard drive and another on a flash drive, or one copy on a flash drive and another using a cloud-based
Ensure that at least one backup copy is stored offsite. You could store your external hard drive in a safe-deposit box or at a trusted friend or family member’s Cloud storage is also considered offsite.

More about cloud storage

Cloud storage — using Internet-based service providers to store digital assets such as books, music, videos, photos, and even important documents including financial statements and contracts — has become increasingly popular in recent years. But is it right for you? If a cloud service is one of your backup tactics, be sure to review carefully the company’s policies and procedures for security and backup of its servers. Another good idea is to encrypt (that is, convert to code) to protect sensitive documents and your external drives. Other considerations include:

Evaluate the provider’s Is the service well known, well tested, and well reviewed by information security specialists?
Consider the provider’s own security and redundancy Look for such features as two-factor authentication and complex password requirements. Does it have copies of your data on servers at multiple geographic locations, so that a disaster in one area won’t result in an irretrievable loss of data?
Review the provider’s service agreement and terms and conditions. Make sure you understand how your data will be protected and what recourse you have in the event of a breach or loss. Also understand what happens when you delete a file — will it be completely removed from all servers? In the event a government subpoena is issued, must the service provider hand over the data?

Consider encryption processes, which prevent access to your data without your personal password (including access by people who work for the service provider). Will you be using a browser or app that provides for data encryption during transfer? And once your data is stored on the cloud servers, will it continue to be encrypted?
Make sure you have a complex system for creating passwords and never share your passwords with

Educate your employees

To help ensure that your employees are also maintaining sound cybersecurity practices, establish clear security policies and procedures and put them in writing. Cover such topics as handling sensitive or personal information, appropriate use of Internet and social media, and reporting vulnerabilities. Clearly spell out consequences for failing to follow the policies. Develop a mandatory employee training program on the importance of cybersecurity. Explain the basics of personal information, as well as what is and isn’t acceptable to post on social media.

Employees could unknowingly release information that could be used by competitors or, worse, by criminals. Ensure that employees understand the risks associated with phishing emails, as well as “social engineering” — manipulative tactics criminals use to trick employees into divulging confidential information.

For more information, visit the SBA cybersecurity website.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

This article was prepared by Broadridge.

LPL Tracking #1-546955