• Informative Articles

  • Written by Pat Langiotti, PMC, President of Creative Management Concepts, who also volunteers as Chair of our FBA Advisory Council. Pat has been providing assistance to small and family-owned businesses for more than 30 years and will draw upon her experience to provide advice to our readers.

    Confusion About Compensation?

    When it comes to money matters in a family business, especially when more than one family member is employed, there is often confusion about who deserves what and what's fair and equitable or just. Money matters can be difficult to talk about - especially among family members. And lack of understanding can cause conflict.

    Clarifying the different forms of compensation is a good first step to addressing this complex matter. There are two distinctly different forms of compensation. First, there is the salary or compensation for the specific job a family member performs. If one family member is the CEO and another is a file clerk - their compensation should not be the same. The CEO's level of responsibility, and generally the qualifications required to perform at that level, are significantly greater than the file clerk's. All employees (including family members) should be fairly compensated for their specific position and the duties they perform.

    Second, there are earnings associated with ownership or shareholder distributions. This can come in many forms such as profit distributions or bonuses, which are paid out based upon whatever criteria the shareholders have defined. This has nothing whatsoever to do with who performs what job; rather, when available for distribution, monies are distributed/earned based upon who owns what percentage of the company. A shareholder who owns 60% would get 60% and a shareholder who owns 5% would get 5%.

    Unanswered questions or disagreements about compensation can lead to bad feelings and longer term relationship problems in a family business - many times the misunderstanding is based upon lack of information or knowledge about how things 'should' be.

    If your family business has questions or issues around compensation, you might want to reach out to an independent outsider for guidance and assistance. An impartial, third party might be able to help resolve potential conflicts before they become unmanageable and lead to impaired family relationships.


    Days Are Numbered for Common Estate Planning Technique
    Read this important article contributed by Paula K. Barrett, CPA/ABV, CVA, CGMA, partner and leader of RKL’s Business Consulting Services Group.
    Regulations that would restrict the use of a common estate planning technique are moving through the approval process in Washington, D.C. The U.S. Treasury Department and IRS earlier this month issued proposed regulations regarding a technique used to transfer interests in family businesses at a reduced value. These proposed changes seek to prevent undervaluation of transferred interests, but will result in the elimination of a significant gift and estate tax benefit.


    3 Tricks for Running a Business with Your Spouse without Divorcing or Going Broke
    Mary Camacho
    Fundamentally, if two people don’t already bring out the best in one another when organizing a dinner party or coordinating a family vacation, then they may not really be suited for adding a business partnership into the mix of a romantic relationship


    Banking on a Strong Corporate Governance Process
    Otis W. Baskin, Ph.D.
    Why are banks so fond of boards with independent directors? What is the big deal?


    Building Family Harmony Starts with Living Our Values
    Deb Houden, Ph.D.
    Few changes happen in a vacuum. Imagine you are a successful next-generation family member with great professional success in a related industry.


    Splitting Roles
    Chris Eckrich
    Individuals that take on leadership in multiple roles in this way are to be greatly appreciated, as with multiple leadership roles come multiple responsibilities.


    Creating a Culture of Accountability in Your Family Business
    Mike Fassler
    Accountability is a regular discussion topic with our family business clients. When accountability is alive and well, individuals, the family and the business may share in success.


    Increase Efficiency by Slowing Down
    Amy Schuman
    Reflection prompts people to be more aware of their progress and gives them confidence to accomplish tasks and goals, the researchers say.


    Building Family Harmony Starts with Living Our Values
    Deb Houden, Ph.D.
    What does family harmony mean? It means the ability to trust and support, communicate differences in a constructive manner and look beyond the self (and immediate family) at a broader picture.


    Empowering the Next Generation with the Future
    Craig E. Aronoff, Ph.D. and John L. Ward, Ph.D.
    The decision to turn an enterprise into a family business by bringing one’s children into ownership or management is among the most profound and petrifying that an entrepreneur can make


    Know What Hat You are Wearing
    Previous FBA Guest Speaker, Phil Clemens, Hatfield Quality Meats
    When we began the process of looking in the mirror to see who we were as a company, it became evident that we needed to refocus the company. It was important for us to involve as many as possible in this process.


    Your Entity Type Selection Cheat Sheet
    G. Scott Myers, CPA, CSEP, a Manager in RKL's Tax Services Group
    There are many different ways to set up a business, but understanding which one is the best fit for your entrepreneurial situation can be overwhelming.




  • Upcoming FBA Events