Business Taxation Q 'n A

Any private business with more than one owner should have a shareholders’ agreement. The benefits are several. First, the exercise of drawing up the agreement allows the owners at the beginning of a business to insure they have the same philosophies and goals with respect to the business. This may lead to the owners going their separate ways, but saves issues down the road. Second the agreement would set out the rules for one owner buying out the other, selling the business to a third party or having to deal with the estate of a deceased partner, potentially saving costly litigation. Third, there may be opportunities for tax planning right from the beginning of the business which may disappear if options are not explored until the business is successful down the road.