The concept of entrepreneurship has been around for several hundred years and has evolved greatly since first being introduced. This model although simplistic works well if there is very little or no competition and there is plenty of demand for your services. But rarely is this the situation especially in a declining market. The model in most cases needs to be more robust. One needs to see the “bigger picture.” In order to support the Business Plan the Model needs to address the four main components of the business; Framework, Financial, Client, and the Offer. Most of these decisions taking regarding the above are the responsibility of the entrepreneur and perhaps one or two other key employees. This is good why human resources management competence is important for successful entrepreneurship and national development. As the firm grows, there will be need to hire new employees; entrepreneur must follow important procedures for interviewing, hiring, evaluating and preparing job description for new employees. Instituting an effective organizational culture is best implemented when an entrepreneur is competent in human resources management.
Another planning opportunity for partnership-owned life insurance deals with buy-sell agreements. Buy-sell agreements for corporations with more than two shareholders create several potential problems. First, with the popular cross-purchase or wait-and-see buy-sell agreement (so that the surviving shareholders receive a stepped-up basis in their shares and a C corporation avoids paying the Alternative Minimum Tax), either a trusteed buy-sell arrangement must be used or business plan multiple policies must be purchased (i.e., each shareholder must own a policy on each other shareholder’s life). For example, with four shareholders, you would need 12 policies. Second, a transfer-for-value may occur at the death of a shareholder as the deceased shareholder’s interests in the surviving shareholders’ policies are purchased by the surviving shareholders. If so, a portion of the insurance proceeds will be subject to income taxes. IRC Section 101(a)(2).