POSSIBILITIES INSIGHTS FOR BUSINESSES & INDIVIDUALS JUNE 2016

Exit Strategy: Transitioning Your Business to a New Owner this issue

While each business owner chases success “No,” Mr. Doe says. 2 in his or her own unique way, there are some Managing Tax Identity Theft “Do you have any key employees who have things nearly all owners have in common. the interest or skill set to buy and run the Hard work, determination, a vision of what business?” could be, and the will to make it happen— 4 these are the stock and trade of anyone who Mr. Doe shrugs. “I have had some over Comprehensive Financial Planning starts a business. There’s also another common the years, but they have moved on to other factor that binds together all business owners: opportunities.” The need to someday transition your business 5 “Do you have good management depth?” New Estate Law Affects Beneficiaries to its next owner. “Not really, everything runs through me,” For some, the decision will come early in the Mr. Doe says. “I call all the shots.” life of their business, and they will be on to 6 the next big thing. For others, it may be among The transaction advisor looks thoughtfully Generations & Technology the last decisions they make as an owner. at Mr. Doe and leans forward. “Do you think Regardless of how you reach this milestone— we can find a buyer to invest in this business whether it’s retirement or a buyer knocking at if you aren’t a part of it anymore? If you own 8 Eide Bailly Adds 14 to Partnership the door—an understanding of the transition all the customer relationships, know-how, process will go a long way to making this technical expertise, and the brand is you, how event smooth and amicable. do we sell this?” Who Will Buy My Business? Of course, Mr. Doe’s story doesn’t end there. One of the first questions you’ll ask when you It’s really just the beginning. While Mr. Doe transition your business is who your potential would like to go back in time and do some buyers are, and it may not be as easy as things differently, it may not be too late for you think. him to prepare his company for sale. He can start by grooming management, transferring It happens all the time. Mr. Doe starts a widget relationships and establishing processes. What business and pours his heart and soul into happens next is a discussion on how to find the it. After years of developing relationships, right buyer so Mr. Doe can achieve his goals— assembling a workforce, creating a brand and both for his retirement and his business. Most achieving success, he’s ready to transition buyers can be classified as either strategic or to retirement. In fact, he wants to move to financial buyers. Florida in the next six months. Mr. Doe consults a transaction advisor, who has a fairly Strategic buyers typically buy 100 percent standard list of questions to learn more about of your business and assume all responsibility Mr. Doe and his situation. for it. Examples include family members, employees, competitors, suppliers or “Do you have any family members interested in even customers. the business?” the transaction advisor asks. Exit Strategy — continues on page 3 2 | POSSIBILITIES

Managing Tax Identity Theft: How to Recognize it and Protect Yourself

The volume of federal tax-related identity theft is growing at an alarming rate. The IRS has confirmed that hundreds of thousands of taxpayer accounts were compromised in last year’s data breach of the “Get Transcript” application that allowed people to check their tax history, and more could be discovered. Tax-related identity theft occurs when an individual intentionally uses the personal identifying information of another individual, typically the Social Security number, to file a falsified tax return with the intention of obtaining an unauthorized refund. Thieves may also use a stolen EIN from a business to create false W-2 Forms to support refund fraud schemes. To try and limit the filing of fraudulent returns, the IRS developed The FTC website also explains: the Identity Protection PIN (IP PIN) program. Prior victims of • How to close new accounts opened in your name identity theft received a unique IP PIN from the IRS to use when • Remove bogus charges from your accounts filing their federal tax returns. However, the IRS confirmed earlier • Correct your credit report this year that identity thieves have been filing fraudulent returns • Place an extended freeze alert or credit freeze with the using these special taxpayers’ IP PINs during the 2015 filing season, credit bureaus meaning the IP PIN program, which was thought to have been a • Report a misused Social Security number safeguarded system, has been compromised as well. We expect there will be many instances of rejected e-filed returns due to identity • Stop debt collectors from trying to collect debts you don’t owe theft utilizing information obtained through the IP PIN program. • Replace government-issued IDs Warning Signs of Tax-Related Identity Theft • Resolve child identity theft You may be unaware you are a victim of identity theft until • Resolve medical identity theft you or your tax preparer attempt to e-file a tax return and it is • Clear your name of criminal charges rejected. Or, you may realize you have been victimized when you receive an IRS notice regarding: But, even with the assistance these resources can provide, the process of clearing up tax identity theft issues can be cumbersome • More than one tax return filed using your Social Security number and time-consuming, especially when dealing with the IRS. • A balance due, refund offset, or a collection action has been Protect yourself by becoming more vigilant and protective of taken for a year in which you did not file a tax return your digital identity by using passwords and changing them • IRS records indicate you received wages from an unknown often. Learn the security procedures of the online businesses employer you frequent. And, if you are using online banking, debit cards Additionally, a business entity may receive an IRS letter about or other , don’t assume they are immune to an amended tax return, fictitious employees, or about a defunct, identity thief. Check financial accounts regularly for unknown closed or dormant business. activity. Being proactive in protecting your digital footprint and becoming familiar with the resources provided in this article Where to Seek Help may not prevent you from becoming a victim of tax identity Fortunately, particularly as the methods used to gain your tax theft because you can’t totally control it, but it will decrease identity for fraudulent tax purposes get more sophisticated, the opportunities of those who would steal your identity. n several excellent resources are available to help you combat identity theft issues. CONTACT The Federal Trade Commission’s (FTC) website, www.identitytheft.gov, has a comprehensive set of instructions on what to do right away if you are victimized, including placing a Mike Mondelli fraud alert with the credit reporting bureaus (Experian, Equifax, National Tax Senior Associate TransUnion), getting a free annual credit report, reporting identity 612.253.6754 theft to the FTC and filing a report with your local [email protected] police department. Businesses & Individuals | 3

Exit Strategy — continued from page 1

The benefits of a strategic buyer can include: • The potential to combine the business with another, creating a more powerful entity and gaining entry to new markets. • Capitalizing on the synergy that comes with a buyer who has intimate knowledge of your business. • Liquidation of 100 percent ownership. Concerns with a strategic buyer may include cultural differences that make integration difficult, or sharing information with competitors who may or may not buy your business. Financial buyers are groups such as a private equity firms, venture capital firms, hedge funds or family offices. Selling to Step Three – Letter of Intent one of these groups may actually mean you end up selling your Once the buyer has a cohesive picture of your business, they can business twice. Many of these buyers invest in businesses they hone in on a more precise value. This is laid out in the Letter of feel they can grow and increase marketability for a future sale. Intent, which covers the purchase price, the structure of the deal, They may buy 75-80 percent of your business’s equity now and whether it is an asset or stock sale, the escrow parameters, the sell the business five to seven years later. You will be paid out working capital allowance, and other details. While this is a very your remaining equity then, and in some cases this 15-20 percent intentional document, it is non-binding. will be the same or more than the original sale of 75-80 percent Final Step – Purchase Agreement of the company. After negotiation, review of legal terms and final due diligence, a Concerns with a financial buyer are the buyer will often require purchase agreement is created. This binding agreement is agreed majority ownership, so the management team and the buyer upon by both parties and will be a road map for how things play group should share the same goals and have good chemistry. out once the deal is closed. How Do I Sell My Business? It’s Your Call Selling your business is more than a tour of the office, a Remember, it’s your business—you’ve put a lot of hard work into handshake and exchanging a check. It can be complicated, it. You know what you want from your business and a potential often messy and intense. It may take up to six months of data sale, as well as what you don’t. However, there is no reason you gathering, negotiations, analysis and various emotions before have to go through it alone. Get advice from trusted business it’s over. advisors and people who have gone through these situations before. They’ll help you navigate the bumps along the way and Step One – The Nondisclosure Agreement make sure you can move on with confidence and peace of mind.n The first step is giving the potential buyer just enough information to help determine a price. It’s important that you CONTACT don’t give a potential buyer any information until they have signed a nondisclosure agreement. This will protect your information and ensure the buyer is only using it to formulate Chad Flanagan an offer. Partner, Business Valuation Step Two – Indication of Interest 701.239.8587 After preliminary due diligence using the information you have [email protected] supplied them with, as well as other research, the buyer will typically give a range of value for your business in the form of an Indication of Interest. If you like what you see in this, Amber Ferrie then you can give the buyer more access to your business’s Partner, Business Valuation information, including key contracts or agreements, customer 701.239.8608 lists or more detailed financial information. [email protected] 4 | POSSIBILITIES

Comprehensive Financial Planning: What It Is and Why It Matters

As you invest and save for retirement, you will no doubt hear or read about comprehensive financial planning—but what does that phrase really mean? Just what does comprehensive financial planning entail, and why do knowledgeable investors request this kind of approach? While the phrase may seem ambiguous to some, it can be simply defined. Comprehensive financial planning is: • Building wealth through a process, not a product. Financial products are everywhere, and simply putting money into an investment is not a gateway to getting rich, nor a solution to your financial issues. • Holistic. It is about more than “money.” A comprehensive financial plan is not only built around your goals, but also around your core values. What matters most to you in life? How does your wealth relate to that? What should your wealth help you accomplish? What could it accomplish for others? and the financial professional(s) who helped create it, can • Considering the entirety of your financial life. Your assets, encourage the investor to stay the course. your liabilities, your taxes, your income, your business—these aspects of your financial life are never isolated from each other. An ongoing relationship Occasionally or frequently, they interrelate. Comprehensive Since the plan is goal-based and values-rooted, both the investor financial planning recognizes this interrelation and takes and the financial professional involved have spent considerable a systematic, integrated approach toward improving your time on its creation. There are shared responsibilities between financial situation. them. Trust strengthens as they live up to and follow through on those responsibilities. That continuing engagement promotes • Long-range. It presents a strategy for the accumulation, collaboration, commitment and a view of success. maintenance and eventual distribution of your wealth, in a written plan to be implemented and fine-tuned over time. Think of a comprehensive financial plan as your compass. Accordingly, the financial professional who works with you Why is this planning so necessary? to craft and refine the plan can serve as your navigator on the If you aim to build and preserve wealth, you must play “defense” journey toward your goals. The plan provides not only direction, as well as “offense.” Too many people see building wealth only but also an integrated strategy to try and better your overall in terms of investing—you invest, you “make money,” and that is financial life over time. As the years go by, this approach may do how you become rich. That is only a small part of the story. The more than “make money” for you—it may help you to build and rich carefully plan to minimize their taxes and debts, and adjust retain lifelong wealth. n their wealth accumulation and wealth preservation tactics in accordance with their personal risk tolerance and changing market climates. CONTACT Basing decisions on a plan prevents destructive behaviors when markets turn unstable. Impulsive decision-making is what leads Brad Kelley many investors to buy high and sell low. Buying and selling Principal, Director of Financial Services in reaction to short-term volatility is a day-trading mentality. 701.476.8759 A comprehensive financial plan’s long-range vision helps to [email protected] discourage this sort of behavior. At the same time, the plan,

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of United Planners Financial Services. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Neither United Planners nor its financial professionals render legal or tax advice. Please seek such advice from your own tax and legal counsel. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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New Estate Law Affects Beneficiaries

Estate beneficiaries, take notice. An estate-related item in the already taken related to a property that was subject to president’s budget proposals for many years was enacted into Form 8971 reporting. law on July 31, 2015. Reporting has been delayed until June 30, A New Consistency Provision and Reporting Requirement 2016, and your action may be required. Assume, rather than gifting the property received as in the example Enacted as part of the Surface Transportation and Veteran’s above, the beneficiary sells the property for $500,000, realizing Health Care Choice Improvement Act of 2015 (Highway Act), new a gain of $100,000 after considering the $400,000 estate basis Internal Revenue Code (IRC) section 1014(f) requires consistency, provided. Two years after the property was sold, the beneficiary really defined as not to exceed, in the amount of basis utilized is notified by the executor of the estate—by providing the between an estate and anyone that receives certain property beneficiary new Form 8971 information—that the IRS adjusted passing from an estate where the property received increased the the value of the property during an audit of the estate tax return, liability for estate tax purposes. In addition, new IRC section 6035 increasing the value to $450,000. The beneficiary now must deal was created to require the reporting of values to “each person with the increase in basis and the resulting reporting changes of a acquiring an interest in property included in the decedent’s gross previously filed return. If the statute of limitations has closed on estate” and to the Internal Revenue Service. Section 6035 applies the ability to file an amended return, they must suffer the loss of only if an estate return is required to be filed and excludes those paying tax on $50,000 of over-reported gain on the sale transaction. estates filing an estate tax return merely to elect portability. The Form 8971 and the required schedules a beneficiary may New Form 8971, Information Regarding Beneficiaries Acquiring be required to file is considered an information return and is Property From a Decedent, has been developed by the IRS for subject to penalties for failure to file. The failure to file penalty reporting the final estate tax value of property distributed (or to be is generally $250 per required form, but if the failure is due to distributed) from an estate. While these new provisions, and Form intentional disregard of the rules for filing the return, the penalty 8971, are primarily addressed to the executor of an estate, anyone is the greater of $500 or 10 percent of the aggregate amount that who receives property from an estate will also need to comply should have been reported, which can become a sizeable amount. with the new rules, especially related to Form 8971 reporting. The new consistency provision and reporting requirement How It Works described above should be applied when an estate tax return is To illustrate the new rules, let’s say an estate, created by a filed after the date of enactment of the Highway Act, which as decedent’s death in November 2015, and required to file an estate noted previously, was July 31, 2015. That means that these new tax return, passes a property to a beneficiary valued in the estate rules can even apply to a decedent who dies prior to July 31, 2015. return at $400,000. The estate provides the beneficiary, in a timely There are still a number of questions to be discussed and manner, with Schedule A of Form 8971, detailing the description resolved related to the new rules for consistent reporting of of the property and the value shown in the estate tax return. estate value basis, but if you are a beneficiary of a recent estate One year after receiving the property from the estate, the you need to be aware of the new rules and determine if you beneficiary gifts the property to one of their children. The are subject to any of the new basis reporting requirements. n beneficiary making the gift is now subject to the basis reporting requirements and will need to provide the child receiving the CONTACT gift and the IRS with Form 8971 and appropriate schedules within 30 days of the gifting date. This provides the child with the information for reporting subsequent actions related to the Dave Zaudtke Partner property and the IRS with the means to track the property activity. 612.253.6536 In this case, the beneficiary would also need to notify their tax [email protected] preparer of the gift for any gift tax reporting required. It’s good practice for anyone receiving a Schedule A of Form 8971 to provide their tax preparer with a copy for reference in reporting Ramona Johnson future transactions. Partner Beneficiaries should also be alert to subsequent notices from the 701.239.8647 [email protected] estate related to the property that could affect actions they have 6 | POSSIBILITIES

Generations & Technology: What You Need to Know to Attract and Retain Millennials

Time—it is the prevailing constant, continually marching forward. And yet, a shocking number of businesses today are fixed firmly in past technologies to run their business. You’ve likely heard arguments about ongoing security concerns and the ability to remain competitive with regard to outdated tools. But one area many leaders do not consider as a direct result of their technology adoption is their ability to attract and retain their industry’s top talent—particularly, the young talent entering the workforce in strides over the past few years. Millennials are officially the majority generation in the workforce according to recent studies, and along with their innate technology savviness, they are affecting how business leaders manage and interact across their organization. Navigating today’s cross-generational workforce is no easy task, but one thing is certain: Your business will not attract or retain top talent by continuing to target the characteristics of previous generations. Are you considering how your business tools are influencing whether or not today’s tech-savvy generation will give your organization a second glance? Meeting Expectations Millennials have technology expectations. Their adoption rates and ability to embrace taking a step backward can feel like you change far exceed earlier generations, have fallen off a cliff. and they are entering the workforce with YOUR WORKFORCE Five minutes to pull a single report? You much higher technology standards for their IMPACTS YOUR may be thinking it’s no big deal, but your employers. Consider how the technology technology-driven talent is grabbing you leverage—or don’t—shapes the talent BUSINESS' another cup of coffee while they wait and pool interested in joining and staying with SUCCESS, BUT searching for their next role, likely outside your organization. YOUR WORKPLACE of your business. More than half of hiring managers Now is the time to start making the report struggling to find and keep INFLUENCES YOUR innovative decisions you’ve been putting Millennials on their team, according to TALENT POOL AND off for years. n 2015 research from the Bureau of Labor Statistics. Conversely, nearly 60 percent of TURNOVER. Millennials expect to leave their current roles in less than three years. So how do you attract and retain this less- CONTACT loyal, highly-innovative Millennial generation? Innovate or Be Left Behind Fostering a culture that embraces technology as an accelerator Joe Tillman for your business growth rather than simply task completion is a Technology Advisory Manager great place to start. View efficiency as a key driver for both your 701.476.8891 organizational productivity and your team’s overall morale. [email protected] It’s undeniable that the window of patience has gotten considerably shorter in recent years, regardless of your generation. When you know the speed and potential of technology today, Businesses & Individuals | 7

TRADITIONALISTS BABY BOOMERS 1925 – 1945 1945 – 1965 • Known as the Silent Generation • Believe in the traditional work model and • 95% are retired “paying your dues” • Technology-challenged in the workplace and • Most influential, representing a large portion prefer in-person conversations of senior leadership today • Strong believers in “face time” and phone calls

Understanding Our Generational Differences To truly appreciate the influence and impacts of the generational gap in today’s workplace, you first have to understand the generations present and how they view both work life and technology.

GENERATION X MILLENNIALS 1965 – 1985 1985 – Early 2000s • Extremely loyal employees with strong • Fastest growing generation in the workplace, leadership presence in the workplace representing the majority as of late 2015 • “Thinkers” of the workforce • View technology as central to • Use technology, though largely out of their lives convenience • Today’s “doers,” adapting and multi-tasking at higher levels • Strong desire to make a difference • Place high value on creativity, innovation and flexibility in the workplace 4310 17th Ave S PO Box 2545 Fargo ND 58108-2545

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