Running a family business is the most natural thing in the world--and the most
unnatural. Handle it well, and it can make you rich, capitalize on bonds no
ordinary colleagues could share, and keep your family employed for generations.
Handle it badly, and it can instead keep lawyers employed for generations.
If you have a family business,
then a recent article in Inc. magazine is a must read to avoid
unaffordable mistakes. In short, these mistakes can kill your family business.
The Inc. article is
titled the “4
Worst Legal Mistakes a Family Business Can Make.” While I commend the
entire article to your reading, here is some of the wisdom offered by the
author:..
- Do not
mix your family finances with those of the business. - Do not
muddle along without employment agreements. - Do not
forget to get (and remain) street legal with appropriate licenses and
filings. - Do not
fail to have a succession plan.
Remember, large or small, your
business is just that – a “business.”
If you treat the company
accounts like your personal checkbook, hire and fire employees on a handshake
(if that), ignore “legal formalities” attending the creation and operation of the
business and take the “get-around-to-it” approach to the succession of the
business, then do not be surprised when the business crashes and burns.
Teaching point: Take time right
now to engage competent legal, accounting and financial counsel to help you
stay out of trouble … before it is too late.
Reference: Inc. (April
9, 2012) “4
Worst Legal Mistakes a Family Business Can Make”
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