One of your primary objectives as a business owner is to grow the value of your company. Succeeding at this objective means business is doing well and generating excess cash flow annually. This cash flow should then be reinvested into the business to support its worth and growth.
While its good news that your business is doing well and increasing value it also means tax liabilities are growing. You should also be mindful of the future of your business at your death. You want your business to remain successful and don’t want to leave the risk of future ownership having to liquidate assets to pay outstanding personal tax bills. If you are not able to pass on the business to a spouse, tax must be paid on the growth of your business at death. Any resulting capital gain will incur tax that must be paid when you pass on your business.
Participating life insurance and strategies can be solutions to help cover future tax bills without interrupting the cash flow needed to continue growing the business.
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