5 things every family business should do – part 3: get financial agreements in place
Category : Practice Updates
by David Harland CPA
Running a family firm can be grinding. Sometimes it is too easy to get caught up working in the business instead of on the business.
A new fiscal year presents family business owners with an annual opportunity to take time to sit with key stakeholders and think about the issues surrounding their business.
Over the next five weeks we will discuss the issues you may like to consider in your business.
Part 3 – Get financial agreements in place
Are your business and family assets protected from third parties?
Many businesses run into financial trouble because of lawsuits, divorces, partnership dissolutions and other financial disputes. If you don’t currently have financial agreements in place that legally protect your assets, you could be leaving family wealth open to claims.
We strongly recommend communicating early and often with family members about expectations around money and family wealth.
Many families experience the stress and financial strain that can appear when a family member gets divorced. If a properly written premarital agreement isn’t in place, the divorcing spouse could be entitled to a portion of the firm’s assets.
Financial issues can also arise when business partners decide to part ways or creditors come calling. Take the time to speak with a trusted lawyer about your current asset protection and ownership strategies. Waiting could prove costly in terms of financial losses and missed business opportunities.
Source: CPA Australia