Buy-sell agreements are a term many business owners know about but often don’t consider for their business despite the fact that they should.

If you are unfamiliar with it, Investopedia defines it as “an approach used by sole proprietorships, partnerships and closed corporations to divide the business share or interest of a proprietor, partner, or shareholder.”  To break this down in simpler terms, buy-sell agreements apply to any type of business, whether small or large, and protect all business owners from issues down the road.

The issues that it prevents can range from financial and tax problems upon an owner’s death to bankruptcy or sale of a company. Putting these factors aside, however, we focus this week on breaking the concept down and highlighting why you should consider one for your business.

When to Consider

Consider a buy-sell agreement to protect yourself and your business partners in the event of the unknown. Life happens, which means you should always be prepared and protected. If you are taking the time to create an estate plan and protect your assets. Then you should ensure to protect the asset that is your business. Secondary reasons include analyzing the cost benefit of having an agreement. An article by Forbes contributor Robert W. Wood goes in depth on benefits and other factors pertaining to these agreements.

If you are still unsure about buy-sell agreements. Or are not ready to take the leap and develop one for your business. Meet with a trusted business attorney to answer pending questions. Explain the process and determine if it is right for you.