June 10, 2010

Death and taxes

I came across a quotation of Benjamin Franklin on the introduction page of a book I recently read which goes as, “… in this world there is nothing certain but death and taxes.”

I would like to add “Christmas and New Year” to this saying. I still don’t understand the shopping fervour of people just before “Christmas and New Year” each year as if they hadn’t known beforehand that the time of “Christmas and New Year” was coming.  :-)

Going back to the saying of Franklin, I think that death and taxes are two important issues for the shareholders who would like to sell all or part of their company shares. If death comes, then it is not possible for you to take your worldly possessions to the afterlife. If you act without taking into consideration the effect of taxes, then your worldly possessions might suffer a decline.

Since most of the SME’s are family companies, I have to say that the owners of these companies have also to think about the future of the family members. Even if we don’t wish to use the word ‘death’, ageing is a natural phenomenon that stars with our birth. Just like we plan our life according to our future expectations (except “Christmas and New Year”… :-)…), we have to plan our life by taking into consideration this phenomenon. One method to realize this consideration is to acquire a suitable partner to ensure the success of our company so that the future of our family is guaranteed .

Coming back to taxes… I am sure that you are informed about tax engineering better than I am. However, I still recommend that you ask advice from a tax consultant. When you receive the bank transfer concerning the sales of your company shares, it is better not to learn that day that a considerable portion of the amount will go for taxes related to this transaction. The laws change too often. Thus, your knowledge of 6 months ago concerning the amount of tax to be paid under certain conditions might now be obsolete.

Since we cannot run away from the two issues mentioned by Franklin, then I can only wish for one ‘to be as late as possible’ and for the other ‘to be as little as possible’…

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