​Family (Personal) Challenges
 
Emotions and inability to separate business and family. Family problems and dynamics will affect the business. Divorce, separations, health or financial problems also create difficult political situations for the family members.  Emotions can interfere with business decisions, and trying to make one another happy constantly is unrealistic.
 
Tunnel vision. Lack of outside opinions and diversity on how to operate the business.  No-one, like a business coach, to ask the tough questions.
 
Role confusion. Roles and responsibilities (for active and passive family members) must be clearly defined. Absence of clear written policies and business norms for family members.  Going from family character to business professionalism can create confusion.
 
Paternalistic and Overly Conservative. Control is centralized and influenced by tradition instead of good management practices.  Older family members try to preserve the status quo and resist change. Especially resistance to ideas and change proposed by the younger generation.
 
Communication problems. Usually provoked by role confusion, emotions (envy, fear, anger), political divisions or other relationship problems create barriers to effective communication.
 
Retirement and estate planning. Long term planning to cover the necessities and realities of older members when they leave the company.

What are the new income tax rates?

For individuals, trusts, and estates, the Illinois Income Tax is increasing from 3.75 percent (.0375) to 4.95 percent (.0495).

For corporations (excluding S corporations), the Illinois Income Tax is increasing from 5.25 percent (.0525) to 7 percent (.07).

When are the new income tax rates effective?

The new income tax rates are effective for income received on or after July 1, 2017.

The following link is to the bulletin from IDOR:
http://www.revenue.state.il.us/Publications/Bulletins/2018/FY-2018-02.pdf

When you own a family business, there are two types of challenges you have to deal with; Business Challenges and Family Issues. We will talk about both, this week starting with Business Issues.

Business Challenges
 
Lack of written strategy. No documented business plan or long term planning. Decisions are made day-to-day in response to problems. No long-term or strategic planning.
 
Control of operations and compensation problems for family members. Dividends, salaries, benefits and compensation for non-participating family members are not clearly defined and justified.  Lack of participation in the day-to-day work and supervision required. Which family members are shareholders vs. daily management.  Difficulty controlling non-participating members of the family.
 
Vision, Growth and Expansion. Each family member has a different vision of the business and different goals. Problems due to lack of capital and new investment or resistance to re-investment in the business.  What measures must be taken to grow locally, nationally, and internationally.
 
Succession Planning. Most family organizations do not have a plan for handing the power to the next generation, leading to great political conflicts and divisions.  Problems when the next generation is not adequately prepared for take-over.  There are some specific issues related to the third generation.
 
Business Valuation and Exit strategy. No knowledge of the worth of the business, and the factors that make it valuable or decrease its value.  No clear plan on how to sell, close or walk away from the business.
 
Lack of talent and Training. Hiring family members who are not qualified or lack the skills and abilities for the organization. Inability to fire them when it is clear they are not working out.   There should be a specific training program when you integrate family members into the company. This should provide specific information related to the goals, expectations and obligations of the position.
 
High turnover of non-family members. Happens when employees feel that the family “mafia” will always advance over outsiders and when employees realize that management is incompetent.

Typical Situation: Our client has seen an increase in their Contribution Rate Determination (unemployment tax rate) that is mailed to all Illinois employers on or about 12-1-2017.  They also have protested their own unemployment claims but have not been successful at getting benefits denied.
 
When you hear a business owner say:
·         “I do not understand why someone was allowed to collect benefits”
·         “I hate dealing with the unemployment office as it is a no win situation”
·         “General: complaints about their unemployment claims “
 
The Consultant educates them on the unemployment laws in Illinois and to help them reduce their state unemployment taxes.
 
How they Work: They protest the claims filed against the employer and represent the employer at all unemployment hearings and go to their locations to do training sessions to educate the employer on how to handle different types of situations.  They will verify all the charges to the employer’s account to make sure they are not being charged more than they should be charged. 

Matching Ideas with Resources: