Hotel & Motel Management - August 2008 - (Page 14) 14 Family Business IN THE details Beyond social security Extra income ideas Create partnerships Perks of the business H&MM August 2008 | HotelMotel.com www.HotelMotel.com/digital_edition Planning for your non-income-producing years here are an infinite number of ways tax law creates methods for business owners and top executives to be paid by the company in taxadvantageous ways. For the business owners who are not independently wealthy apart from the company, Uncle Sam has provided many choices for you to have a healthy stream of in- T By Mike Henning H&MM Columnist come without getting direct pay from your business. The list that follows will give you a good idea of what can be done to support your current lifestyle over and above Social Security and stock market investments. Rental income on buildings, land and equipment used by the business. This income saves dollars on payroll taxes. A non-qualified deferred compensation plan can provide income until the time of death for both husband and wife. When the company makes the payment to the former owner(s), it becomes a business deduction, and dad and mom pay tax in their federal income tax bracket only. No other taxes are to be paid. To assure money will be ©2008 Hilton Hotels Corporation. 36 USC 220506. All Rights Reserved. Minnesota FDD Registration No. F-1059 Be family. When you join the Hilton Family of hotels—a proud sponsor of the 2008 U.S. Olympic Team—you’re investing in more than a property. You’re investing in a philosophy and a promise to be hospitable. And you’re backed by more than a powerful network of support; you’re backed by a family. So no matter which brand you choose, the entire Hilton Family will be there for you as we are for our athletes. For development opportunities, visit hiltonfranchise.com or call 1-800-286-0645. In addition to franchising, we also offer Hilton Management Services, providing strength in numbers and a family tied to performance. For inquiries, please visit hiltonmanagementservices.com. The Hilton Family 9 distinct hotel brands, ® one simple philosophy: be hospitable. paid, set up a rabbi trust and segregate the funds needed to make the payments. The Accumulated Adjustment Account is taxable income that has been accumulated while the corporation is an S corporation. If the corporation has not accumulated much income, you can prepare for a stock redemption by retaining earnings. Many companies will do this naturally as they re-invest cash in the business. The stock redemption is tax-free to the extent of your AAA account. Cash can be taken from a 401(k) plan, but taxes will have to be paid. A family limited partnership can allow you to control the assets it holds and own a very small portion. Limited partners own the assets but have little to say about their management because you are the manager and can be paid for your work. Fringe benefits such as new vehicles, cell phones, accounting work, travel, etc. Shareholder loans to the company that have never been paid back—now is the time to collect. Retained earnings that have accumulated over the years can be removed from the company for your use. Consulting and director fees. Work part-time for business. Private annuities. Off-the-books perks, such as trips to conventions, a vacation home or an expense account. Medical and health insurance can be provided by the new medical savings plan. All of these plans are available to provide the retiring owner income when his/her reign of leadership has ended. One caveat: Most, if not all, of these cash-producing techniques will not work if the company is not profitable. hmm@questex.com Mike Henning is the founder of the Henning Family Business Center, which was established in 1985 and is headquartered in Effingham, Ill. He can be reached at hfbc@mikehenning. com and www.mikehenning.com. CIRCLE NO. 135 http://HotelMotel.com http://www.HotelMotel.com/digital_edition http://hiltonfranchise.com http://hiltonmanagementservices.com http://hiltonmanagementservices.com http://www.mikehenning.com
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