Family Businesses Are Taxing

Carrie Hall for Forbes writes: Taxation has never been so multifaceted, and failing to consider all the elements could prove costly to your family and your business. It’s important to make sure your executives know the ramifications of their decisions and take a holistic approach to tax planning.

Are you expanding? Plotting investments? Sorting out financing and liquidity? Tax laws affect all of the above and factor heavily instrategic plans for family businesses in particular.

Without careful consideration, the following tax factors could cause you to stumble.

Personal tax

You may have business interests, homes and assets around the globe. Liabilities can surface in multiple countries based on residence or asset location. Failing to consider your international affairs can erode your wealth and impact the disposition of your estate. Safeguard your family and your business for future generations by ensuring your tax advisor is globally integrated and understands how to best serve your interests in each jurisdiction and collectively.

Corporate tax

Whether you’re restructuring or acquiring another business, identify the most efficient tax structures that will apply. Prepare for global tax and legal changes and the potential implications for your company. This will enable you to capitalize on fiscal stimuli and incentives, such as climate change program tax credits or “green” research.

Tax controversy

The fine print of complex laws and the gray areas with multiple answers, such as valuation, can give rise to tax controversy. Resulting litigation and penalty costs can be steep. Adding international tax controversy and risk management to your strategic plan could yield multiple dividends and provide greater certainty and flexibility. You may be able to free up cash and reduce your tax compliance costs.

International issues and transfer pricing

There are a host of potential tax policy changes and international disclosure agreements that could affect your international footprint. Many tax administrations are adopting new policies and approaches to improve compliance through service and enforcement. And they’ve accelerated international collaboration. Set a clear strategy for cross-border tax controversy and risk management that syncs with your performance improvement and expansion plans.

Family trust management

Proactively managing your tax plan and weighing your succession planning options could potentially reduce your tax burden and exposure to tax controversy. The tax benefits of trusts can be attractive, but you’ll want to heed strict rules to protect them from inheritance or gift taxes. Many countries have estate tax treaties that offer exemptions or reduced tax rates on transferred assets.

What are your ideas for effective tax management? How do you keep liabilities to a minimum?