Starting your own business in California can be scary, but it’s also exciting. You may wonder if you should include your family when you start this venture. It’s important to be smart if you choose to go that route. There are certain things to keep in mind if you choose to include your family in your business.
Create a family business plan
Business operations can be challenging even if you decide to include family members. It’s wise to consult with your business, tax and legal advisers so you can develop a strong business plan. You should include the following in your plan:
- Define roles: Every family member included in your business should have clearly defined roles. Each person should know what’s expected of them in the company. This can help to prevent potential confusion.
- Compensation: Lay out a plan on how compensation will be given whether it’s hourly or an annual salary or through other means.
- Ownership stakes: This needs to be clearly explained before you officially open for business. Make sure your family members understand whether they have ownership stakes.
- Exit plan: You should have an exit plan set just in case a family member decides to leave the business in the future.
- Succession plan: Family members need to know what happens if someone retires or decides to pass the business to someone else to start anew. You should determine who would inherit the business.
Set ground rules for your business
During the business formation process, you should set ground rules. The following should be included:
- Separate work from personal life: It’s common for issues to arise when work and personal life mix. Set a rule for your family members that the business should stay focal at work and that personal issues should stay at home.
- Let kids be kids: If you have teens who want to participate in the business, stress that they should get experience outside beforehand. Later, you can allow them to join the business full-time if they wish. It can help them gain valuable skills.
- Get outside advice: Always seek advice from outside experts about running your business. Issues like benefits, health insurance, tax forms, retirement plans and more can be complicated when you’re a new business owner.
- Hire outsiders: While it’s nice to have family members as part of the business, you shouldn’t neglect to hire other people as well. They can be valuable to the company.
- Treat everyone equally: Even though you have family members in the business, you must treat everyone equally. Don’t favor anyone over everyone else.