Legal Issues for Seniorpreneurs
Seniorpreneurs have a higher entrepreneurial activity than the mainstream young entrepreneurs in their 20’s or 30’s according to the Swinburne University of Technology Associate Professor of Entrepreneurship – Alex Maritz.
People in their 50’s or 60’s, deciding to not retire at home, but retire into starting a new business are the fastest growing segment of entrepreneurs.
While seniorpreneurs have the advantage of years of experience, huge network and money to invest in a new business, there are a few legal issues for seniorpreneurs that they should pay more attention to than any other entrepreneur.
1. Business Structure
The business structure that you choose for your startup is the most important decision you will ever make and it will define how you run your business from now on. (Click here to learn why a business’s structure is a startup’s key decision).
The business structure decision will in short define if your personal assets are protected and who takes the decisions in your company, what taxes and reports you need to file and how you manage succession planning.
This decision is even more essential for seniorpreneurs because in most cases they have accumulated assets and resources. Let’s face it – most baby boomers have savings that they wouldn’t like to lose.
That’s why a sole trader business structure might not be the best decision for a seniorpreneur. A company with limited liability for the owner might be a better choice for protecting the family assets and keeping the business and personal finances separated.
The choice of a partnership structure also makes sense if the seniorpreneur wants to not only create a business but leave a legacy. With a good partnership agreement, more and more partners (up to 20) can be brought on board with time. The seniorpreneur might find it easier to step back when he or she no longer wants to actively participate in the business.
2. Succession Planning
Succession planning is not an issue many entrepreneurs in their 20s or 30s think about (even though every business owner should consider it), but it is one of the first things seniorpreneurs should address.
With age, insecurity about life expectancy and the ability to actively work is on the rise. Succession planning is the exit plan of the seniorpreneur and is as important as the business plan itself. What happens if you suddenly cannot perform your managerial tasks anymore? What happens if an illness or a health condition gets worse?
Many seniorpreneurs consult their lawyer to create a plan for their business and how it will be run if they are not around to make decisions. Choosing your business successor gives you the confidence that the business will be operated as you intend it to be. Moreover, you know who to train to be the new manager!
Seniorpreneurs pay special attention to succession planning because they have the experience to know that it is essential legal aspect of running a business.
3. Business Will
Most seniors these days have a personal will which has been carefully prepared by their lawyer. And they are one step ahead of most entrepreneurs who have none!
However, we can’t stress enough the importance of having two wills – personal and business one. This is if the seniorpreneur has done the smart thing and chosen a business structure that separates personal and company assets.
A business will arranges issues of succession planning, ownership transfer, selling or closing the business if that’s the wish of the seniorpreneur.
The most important role of your business will is to protect your loved ones from having to deal with company debts or other liabilities. It also designates the most suitable person to deal with the business after the passing of the owner. In the absence of a business will the weight of dealing with your startup might fall on the shoulders of people who have no idea what to do with it.
The business will is the most important piece of paper that will make sure that your startup continues to exist as you have intended it to.
Any seniorpreneur should pay close attention to all legal issues concerning a startup because legal responsibilities are not limited to just those three points. Here we discussed the legal issues that are specifically important for entrepreneurs in their 50s and 60s. (Click here to find more information on the 5 key legal issues for business owners).
Retirement can present seniors with a great opportunity to start a new business. Regardless of the setbacks, more seniorpreneur businesses turn out to be successful than anyone expects. The rise of the seniorprenuer is obvious because 60 are the new 40.
One of the most important issues for seniorpreneurs, as for any entrepreneur for that matter, is paying close attention to the legal aspects of the business and having a good relationship with a small business lawyer.
If you need seniorpreneur advice, we would be happy to help! You can contact us here.